(Bloomberg) -- Circle’s USD Coin is reaping the benefits as circulation of Tether, the world’s largest stablecoin and its closest rival, continues to decline in a wave of redemptions.

Earlier this month, the collapse of algorithmic stablecoin TerraUSD pushed investors to seek sanctuary in other cryptoassets that aim to maintain a one-to-one peg with the US dollar. While the subsequent market contagion caused cryptocurrencies and stablecoins alike to wobble, Tether’s USDT briefly lost its dollar peg and fell to 95 cents on May 12 -- a knock that’s been followed by $8.5 billion in redemptions to date, according to data from CoinGecko.

As time presses on, the total market capitalizations of Tether and Circle appear to be converging as investors trade from one and into the other, with Circle’s circulation rising by nearly $3.4 billion over the same period. Other stablecoins are also benefiting, with Binance USD’s value up by $1.2 billion.

TerraUSD, or UST, used an algorithmic design to adjust its supply through trades with its sister token Luna, intended to help it keep a steady value of $1. Collateralized stablecoins like Tether and USD Coin, however, rely on a reserve of dollar and dollar-equivalent assets to support their supply. Questions have previously been raised about the quality of Tether’s stockpile, though it remains the dominant quote pair on many crypto exchanges.

The fallout from Tether’s brief dip from its peg has reversed a downward trend for Circle’s USDC, the supply of which had been slowly contracting since late February, data from Glassnode show. 

“Given the dominant growth of USDC over the last two years, this may be an indicator of changing market preference away from USDT and towards USDC as the preferred stablecoin,” a Glassnode on-chain analyst known by the moniker Checkmate said in a report Monday.

Read more: Circle CEO Sees Algo Stablecoins Ruled as Synthetic Derivatives

Jeremy Allaire, chief executive of Circle, told Bloomberg on Tuesday the company had seen a flood of additional demand after Terra’s collapse. 

“There were multiple scenarios where we could see it being triggered into a death spiral, and that’s exactly what happened,” Allaire told Bloomberg TV. “We’ve seen since then a real flight to quality.”

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