Over the past couple of days, stable coins have become increasingly volatile following Tether’s unprecedented fall to $0.87. It now appears that investors are fleeing Tether due to various concerns, and shifting to alternatives, like the Gemini Dollar.

Tether’s market capitalization has taken a nosedive, dropping from nearly $2.7 billion on Saturday to its current level of approximately $2.2 billion. In total, Tether’s market cap has dropped $500 million in the past few days.

It now appears that part of this $500 million has been shifted to the Winklevoss-backed stable coin, Gemini Dollar (GUSD), which, like Tether (USDT), was developed to act as a digital alternative to the US Dollar that makes cryptocurrency trading significantly easier.

GUSD was released by Gemini in early September, and notably gained regulatory approval from the New York Department of Financial Services (NYDFS), allowing the exchange to list and issue the dollar-pegged cryptocurrency to investors. At the time of its release, Gemini explained that the stable coin would be “strictly pegged” to the USD.

On October 16th, however, GUSD surged to $1.19, trading 19% higher than it was designed to trade at. It has since fallen to its current price of $1.04.

Stable coins are, ironically, becoming a profitable investment for investors, mainly due to the unprecedented shift in stable coin funds away from Tether, which currently dominates the markets.

In addition to seeing unprecedented volatility, USDT token supply has been gradually decreasing, with approximately 2.25 billion tokens circulating out of a total supply of nearly 3.1 billion. Over the past few days, the circulating supply has been dropping, with nearly 600 million less tokens circulating today than there was last week.

Bitfinex, the cryptocurrency exchange behind the creation of Tether, spoke about the decreasing supply, explaining that:

"Hypothetically, when the supply of USDT on Bitfinex surpasses a certain level required for maintaining operations (i.e. a seamless flow of deposits and withdrawals), a batch of USDT would be sent from Bitfinex to Tether for redemption against fiat USD. This subsequently lowers the circulating supply of USDT whilst the fiat USD previously held by Tether goes to the redeeming party."