Bitcoin is notoriously volatile: so far in its short life, its value has largely been determined by a cycle of hype, followed by panic.

But it turns out that despite its wild lurches, the cryptocurrency was the best-performing currency of 2015 – rising 35 per cent against the dollar during the year, according to analysis by The Money Project.

The next best was the Israeli shekel, which rose 0.3 per cent. Meanwhile, the yuan – which was liberated from its peg against the dollar in August – fell 4.2 per cent, while the Indian rupee fell 4.5 per cent and the pound dropped 5.9 per cent. Ouch.

Bitcoin enjoyed a particularly strong rally in November, when it surged 50 per cent in three days, smashing the $500 mark, after the EU announced plans to exempt it from VAT.

This week it was at it again, rising past $450 yesterday as equities investors panicked over turbulence on Asian markets.

But investing in Bitcoin is not for the faint-hearted: the figures by the Money Project show its biggest rally was in 2013, when its value rose 5,429 per cent. In 2014, it fell 56 per cent – followed by a 35 per cent rise in 2015.

Lest we forget, research by mergers and acquisitions adviser Magister Advisors has found that over the next 15 years, the currency is likely to become the world's sixth-largest reserve currency. Investors should be prepared for a bumpy ride…