While Tether is currently the largest stablecoin, the competition competes on the fact that they are overcollaterized, fully backed and auditted. The sooner Tether is replaced by the competition the better. On the upside, stablecoin swaps like Curve and Balancer have made exchanging USDT for any other competing stablecoin cheaper and easier.
I wager these services are being used mainly to decrease reliance on Tether for whales. Would be interesting to analyse the data of stablecoin swaps to gauge trust in USDT.
BTC holders would not look to exchange for Tether in the case Tether turned up unbacked. If BTC sellers were to sell they would exchange for other cryptocurrencies or more likely other stablecoins that are actually auditted.