Part of the idea of a currency is a stable value, that means supply and demand need to be matched. With a fixed quantity such as all the common cryptos, when demand rises (either organic or from manipulation) there is no way to keep the value stable so the value of the currency will be constantly whipped around as demand is constantly changing.
This is the general problem with floating currencies. They are difficult to keep stable. Fiat tries to solve that by putting someone in change of money creation (in the Feds case until recently this was mostly in the form of manipulating the overnight rate banks charge each other).
Another way to do it is through pegging the price to something believed to have a stable value itself. Various precious metals have been used in the past, but commodity baskets are also thoght of (look at the chart of the CRB index vs gold and they are almost the same). Baskets of floating currencies have also been used but they arent nearly as stable and still rely on central bank decisions.
A currency peggged to an underlying doesnt mean you need to hold all the underlying. You just need to intervene in the market when your target price rises or falls too much. This could be what Bitfixex/Tether is doing. They aren't holding dollar reserves, but they are keeping the exchange rate constant with other traders by stepping in when necessary. That's why they don't have a conversion window.
If you had a crypto that was stable, pumping might not be nearly as effective since the currency you are pumping isn't going to increase in value, just more will be created to cover the demand.
So now we have a situation where BTC is easily manipulated up on artificial demand pressure, but that will also cause a rise in BTC/USDT sales as there are now just more trades. This pulls the value and price of USDT up, but to keep it at 1 USD, more USDT need to be printed and sold. And this is exactly what we see.
So they can sell either USDT for USD directly, or they can sell USDT/BTC. But now they have a bunch of BTC, so they can go sell that too pushing BTC even higher. The party stops when demand for USDT starts falling and the price needs to be defended.
I think if we ever get a good crypto currency it will be pegged to a commodity basket or gold or something. I'm working on the idea of how to control supply algorithmically and fairly though a combination of systems and bonds.