As the curtain closed on 2017, millions of investors looked back on what was likely the best year ever for cryptocurrencies – no matter which they put their money in. Though the market’s attention was firmly focused on bitcoin's impressive five-figure price tag, other cryptocurrencies achieved even greater gains. This is apparent when looking at how the industry’s total market cap between cryptocurrencies has fragmented.

Where bitcoin once represented over 85% of the total crypto capitalization in January 2017, it now stands at just 43% of the pie a year later. This is due to competition from other coins like Ethereum, but also the coins that were created with Ethereum itself. These new entrants captured the imagination of investors (and their money) in 2017, managing in many ways to steal bitcoin’s thunder.

Slow and Steady Wins the Race

Those crypto investors who resisted cognitive dissonance and held onto their coins for the entirety of 2017 saw some serious returns whenever they determine it was appropriate to realize their gains. Holding a single bitcoin from January through December 2017 corresponded to unrealized gains of around $13,500 at the time of this writing, while the same feat for one Ethereum rewarded around $750.

Given this information alone, most would consider bitcoin the better investment, but not when they’re supplied with the starting price of each coin. Ethereum’s January 2017 price of around $7 means that it gained an astounding 10,000% in 2017. The star of the show, bitcoin, began the year at about $800 and managed to add about 1,500% to its price.

"Ethereum has huge potential, 2017 was the year of ERC-20 tokens, but Ethereum has a lot more to offer," said Yuval Gov form CryptoPotato. "Scalability is one of the key issues to be solved, but as an investment it will be very interesting since Ether is currently traded at about 70% from Bitcoin's all-time high levels."

It almost hurts to imagine the gains one would have made from a mere $1,000 investment. Ethereum would have turned each $1,000 into almost $100,000 by now – returns unmatched by any asset class in 2017. Hindsight is 20/20, as they say.

However, sentiment about Ethereum specifically was much different in January 2017, meaning only those with an enormous risk appetite are currently celebrating. Ethereum’s rise from the single-digits in January to pushing four figures in December 2017 was only surprising for those who forgot how unstable Ethereum was at the outset of the year, and how little progress it made on its primary value proposition until then.

Ethereum's price is also intimately linked to what we do not yet know.

"According to State of the Dapps, there are more than 250 Ethereum or ERC20-based projects that are currently live in the market, plus over 500 more between concept and demo phases. Hundreds more are in stealth mode or are undisclosed. It is these distributed applications or 'Dapps' that make the greatest driver for the value of Ethereum; the more popular that dapps become, the greater the demand for Ethereum and the higher that Ethereum’s value will be driven," said Robert Binning, CEO for StreamSpace, one of these Ethereum-linked “work in progress” projects

From Toddler to Patriarch in 1 Year

From its inception in August 2015 to January 2017, Ethereum was largely a work-in-progress, and suffered from several bugs that kept companies from wanting to build on its new smart contract infrastructure. This same unstable infrastructure was responsible for the coin’s performance in 2017. For the entirety of 2016, however, Ethereum's price floated between $1 and $7, though it did reach $11 before the infamous DAO hack took place.

Regardless, Ethereum entered 2017 with a bevy of new companies ready to finally put their smart contracts to the test. These startups used Ethereum’s platform to create derivative tokens with relative value to Ether, in what we now refer to as an ICO, or initial coin offering. This functionality had borne little fruit until then. But as more companies experienced successful ICOs on Ethereum’s platform, momentum began to snowball. Bitcoin helped to bring new money into the industry, and these younger companies benefited immensely from this cash injection.

A trend formed whereby people would sell their bitcoin at new heights and then put their returns into small-cap altcoins for further speculation. The strategy worked well in 2017, though it generally amounted to nothing more than penny stock investing. Despite the risks, 2017 was the “Year of the ICO,” with many popular tokens built on Ethereum like Golem, OmiseGO, Augur, TenX, Status, Monaco, Decentraland, and hundreds of others experiencing enormous growth.

One of the first was Bancor, an ICO that attained $153 million in Ethereum funding in just 3 hours in late June 2017. Speculators on Bancor (and other ICOs that followed) generated tremendous returns, and in-turn spiked demand for Ethereum – which is necessary to invest in ICOs built on its platform.

As these blockchain companies grew, Ethereum echoed the ecosystems proliferation. Businesses and investors alike quickly reaped the rewards of this new style of crowdfunding, and Ethereum gained market capitalization and price accordingly. During its burst to $400 in early July, Ethereum’s percentage of the industry’s total capitalization was almost 40%, on par with bitcoin.

Ended the Year Strong

The mania that helped bitcoin achieve a price tag of almost $20,000 naturally contributed to the other, cheaper coins available on the same exchanges. Ethereum and Litecoin were listed right alongside bitcoin, and once new investors entered the market to grasp the tail end of these gains, they spread their money between the year’s top earners. Accordingly, right after bitcoin’s run-up, Ethereum and Litecoin boomed upwards in similar proportions. From support at around $300, Ethereum managed to cap $850 before retreating..

As 2017 ended, many took profits from the year’s intense growth. Prices were therefore under pressure, with Ethereum wobbling between $650 and $750. This came after a drop to as low as $600, though many who likened December 2017 to 2013 (after which a 3-year bear market occurred) believed it would go lower still. However, it’s always been a risky proposition to bet against cryptocurrency, and many others believe that 2017’s gains will shrivel in comparison to 2018’s potential.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.