For a number of months the rise of cryptocurrencies has been called a bubble by many market commentators across the world.

Well, unfortunately for crypto traders, that bubble looks like it may have just burst after a cryptocurrencies meltdown overnight.

The bitcoin price has lost almost 18% of its value over the last 24 hours and is now fetching US$11,671 per coin according to Coin Market Cap. This reduces its market capitalisation to US$196 billion and means it has lost 41% of its value since peaking at US$19,850 in December.

Elsewhere, similarly sharp declines were experienced by the altcoins. Ethereum has fallen close to 19% to US$1,077.96, giving it a market capitalisation of US$104 billion.

Trader favourites Ripple (XRP) has tumbled an incredible 29% to US$1.28, Cardano is down 25% to 61.9 U.S. cents, and Litecoin is off 17% to US$197.50.

What happened?

Concerns over a crackdown by Chinese regulators and lower than normal trading volumes in South Korea and Japan appear to have spooked the market.

Both China and South Korea are rumoured to be on the verge of banning cryptocurrency trading, which would be a major blow to the industry. These two nations are amongst the biggest crypto traders in the world and if they all rush to the exits together, prices are likely to tumble even further.

Should you buy the dip?

While there’s a chance that bitcoin and the altcoins could bounce back from this, I think the safest thing to do is to watch on from the sidelines.

So instead of risking money in these volatile assets, investors might want to consider putting that money to work in the Australian share market. I believe there are a number of quality shares offering strong potential returns with far less risk.