Market cap is not the sum of all injected capital, it’s the total supply multiplied by the most recent value of a unit. For example, if you paint 2 paintings and sell them to me for $100 each, and then I sell 1 of them for $1000 to a third-party, the market cap of your paintings is $2000 ($1000 x 2 paintings) despite there only being $1100 dollars spent.
It’s plausible that there’s less than $80bn of USD in the crypto market and so tether could well represent every single dollar available. I don’t know if I’d argue that is the case, but it’s certainly plausible — and so it’s easy to see how a collapsing tether could take down the entire market, or at least, represent a far greater threat than the ~5% it represents in market cap numbers.
It’s plausible that there’s less than $80bn of USD in the crypto market and so tether could well represent every single dollar available. I don’t know if I’d argue that is the case, but it’s certainly plausible — and so it’s easy to see how a collapsing tether could take down the entire market, or at least, represent a far greater threat than the ~5% it represents in market cap numbers.