This year has had its share of financial shock and awe but nothing comes close to the manic rise of cryptocurrencies.

While bitcoin has hogged the headlines with its head-spinning gains, rivals like ethereum and litecoin have been caught up in the mania as well.

Bitcoin's stratospheric surge from around US$1,000 in January to over US$18,000 on Monday - a gain of 1,700 per cent - left many other asset classes in the dust and those who missed out on the runaway rally agog. Its market capitalisation of US$283 billion (S$381 billion) surpasses Finland's gross domestic product.

Defying its staunchest critics and sceptics, bitcoin, a virtual currency not backed by any government, gold, silver or cash reserves, has gone from being perceived as a mere passing fad to one of the best performing investment assets the year.

Bitcoin had been rising steadily throughout the year - give or take some sharps dips - but went into overdrive after the American derivatives regulator, Commodity Futures Trading Commission, said it would allow futures trading in the currency. It was a watershed development for institutional investors and high-speed traders eager to bet on cryptocurrencies and their wild swings.

Prices broke through major barriers in the weeks leading up to the launch of the first bitcoin futures product on the Chicago Board Options Exchange on Dec 10. Bitcoin surged past the US$11,000 level on Nov 29, over US$16,000 on Dec 7, and hit a record high of US$18,674 on Dec 18 before shedding 15 per cent to US$16,702 yesterday. It was the steepest decline since bitcoin futures were introduced on Dec 10.

But other digital currencies have seen bigger price jumps. Ethereum has skyrocketed more than 9,600 per cent this year to over US$799, while litecoin has soared more than 7,500 per cent to US$335 as of yesterday, according to CoinMarketCap. Observers say this could have been driven by speculators in Asia looking for a proxy to bitcoin, which has become too expensive.

Grace Leong