A major crash in prices of cryptocurrencies has resulted in the market losing around USD 16 billion in market capitalisation.

A sell-off started in major digital currencies like bitcoin, ethereum and ripple on Monday and continued into Tuesday. Over the past seven days, the three currencies have lost around 9 percent, 26 percent and 28 percent in value, respectively, as per CoinMarketCap.

The total marketcap of cryptocurrencies has fallen to its lowest point since May.

After briefly reaching an all-time high of USD 3,000 last month, bitcoin has dropped around 22 percent. It was trading at levels of USD 2,330 at the time of filing this report, as per Coindesk price index.

On the other hand, ethereum, which had a phenomenal rally this year, has fallen 50 percent from its all-time highs and is currently trading marginally below USD 200.

Other altcoins saw a much steeper dip in the range of 10-30 percent on Tuesday.

Correction as on 12:44 PM IST on July 11:

"The market has seen some heady valuations... as prices were being driven by the mania for ICOs (initial coin offerings). This encouraged new entrants to invest in crypto assets," Charles Hayter, co-founder and CEO of cryptocurrency data platform CryptoCompare, told Moneycontrol.

"There has been a large net inflow into the crypto economy of late and this is starting to unwind as more reasoned expectations take hold," he added. "The Fed rate hike could be readdressing the balance of Bitcoin to USD sentiment - making the dollar more attractive."

When asked whether this correction means the crypto-bubble has finally burst, Hayter said: "Yes and no - it's difficult to tell. These things come in waves as new affinity groups enter the market. Korea and Japan were some of the key catalysts driving money into the space in the latest bull run."