Good point. It's not the fiat price of Bitcoin going up, it's Tether losing value and failing to maintain the peg it's supposed to keep to the US Dollar.
it's both. that's the frustrating thing about trying to approach this from the perspective of fundamental analysis. we know that price is rising on bitfinex and USDT markets because buying is the only way to exit those markets.
but price is also rising on the other exchanges. if it were based purely on the inability to withdraw fiat, we would expect price to rise on bitfinex and fall on the other exchanges---because some people are buying crypto on bitfinex (or binance etc) to dump on other exchanges.
instead, price across exchanges is still following bitfinex's upward trajectory.
People need to remember that Tether is more of a company than it is a cryptocurrency and you're placing a large amount of trust in that company when you store your wealth in USDT.
holding USDT is exactly the same as holding USD on bitfinex. it's redeemable there and issued by the same company. that's the way i view stablecoins: like fiat balances on exchanges, they are IOUs from the issuing exchange.