It would be worse because I think it would finally end the sequence of ever-bigger bubbles followed by collapses to higher lows.
Why? Because the narrative that fueled this sequence has been "people with ever deeper pockets coming into crypto", and we are close to the end of this narratives' natural life anyway. The current "ever-deeper pockets" are institutional investors, which is as far as it gets in terms of deep pockets anyway, but which are also very sensitive to risk and need calculable risk envelopes. Stablecoins, with their publicly-known market caps, provide an approach to guesstimate the total amount of actual value underlying cryptocurrencies and thus help significantly in evaluating the risk of a crypto investment - theoretically, as long as we know that there is X amount of fiat money invested, the total crypto market cap cannot fall below that value. If we now learn that a huge chunk of this money does not exist anymore or never existed at all, the risk calculation becomes much worse. It is akin to a fiat currency of a country that is found to have blatantly invented big chunks of its official GDP for years - nobody would want to store value in that currency anymore. And without institutional investors, there are no "deeper pockets" anymore, hence the primary reason why most people hold cryptocurrencies - to participate in the growing crypto pie - falls apart, which should trigger a series of waves of sell-offs, similar to the "buying waves" during the last decade, but inverted (quick drops to lower lows, followed by slow recoveries to lower highs, followed by lower lows and so on).
At least this is what I expect.