Now, thanks to tether you do not need to remove your money from the exchange for it to be a fiat, you can keep it on usdt and makes going back into bitcoin so much easier, which probably helped out a bit. I dislike tether but I can't deny its help.
It is definitely helping when it comes to keeping capital inside the crypto market, but that's not entirely because of people not seeing a reason to withdraw fiat, but more so that they can't withdraw.The only way to withdraw fiat is to sell your USDT to Tether/Bitfinex. If you take into consideration that most holders of USDT are likely not those who injected it in the ecosystem, you'll see why they can't withdraw fiat.
I totally wouldn't feel comfortable sitting in USDT for a long period of time. I get its utility in being an easy to move fiat alternative for traders and investors, but the aftertaste is horribly sour.
Pretty sure that 99% of people or at least all the small retail traders don't send their Tether to Tether.io and do a withdraw into their bank account.
Most people send their Tether to an exchange, buy BTC, and send that BTC to an exchange where they sell for fiat like Gemini or Coinbase.
The fees add up taking these steps but I am pretty sure most don't care since BTC did 300% gain this year, so an extra 1% in trading fees doesn't bother most people.
