Regulatory rumors surrounding USDT have triggered fund outflows, raising concerns about its market dominance. As the leading stablecoin, USDT's stability is crucial for crypto trading liquidity. Recent data shows its market cap grew to $139.79 billion, holding nearly 70% of the stablecoin market. However, scrutiny over reserves and compliance (e.g., EU’s MiCA) could erode trust, driving capital to rivals like USDC or RLUSD. This shift may disrupt exchange liquidity, pressuring altcoin prices, as USDT pairs dominate trading volume. Altcoins could face heightened volatility or sell-offs if USDT weakens, especially in emerging markets where it acts as a USD proxy. Conversely, a flight to regulated stablecoins might stabilize some altcoins long-term, though short-term turbulence seems likely. The ripple effect hinges on how regulators and markets respond.