Crypto Owners Expect 22% Returns, Non-Owners 7%: Fed Study

A Federal Reserve Bank of Cleveland study found that what people believe about crypto returns predicts whether they own crypto more strongly than demographics including age and income. The study, based on surveys of up to 25,000 US households, ran randomized information experiments that gave some participants data on Bitcoin's past performance.

The researchers, Michael Weber, Bernardo Candia, Olivier Coibion, and Yuriy Gorodnichenko, found that households given Bitcoin return information increased their desired crypto allocations by about 2 percentage points, a 47% jump from the control group's baseline of 4.3%. Actual purchases rose by 2.5 percentage points. The effect was strongest among people who had previously said they stayed out of crypto because they didn't know enough about it.

Crypto owners expect a 22% return over the following year. Non-owners expect 7%. For every one-percentage-point increase in an individual's expected return on crypto, the likelihood of owning it rises by 0.8 percentage points. The relationship is sharper than for stocks or bonds, where demographic and financial background do more of the heavy lifting.

Demographics still matter. People under 40 are 13 percentage points more likely to own crypto than those over 60, after controlling for other factors. Men participate at higher rates than women. Wealthier households participate more. Remove those factors, and beliefs about returns remain the dominant variable.

The experiment ran in 2025. Households were randomly assigned information about Bitcoin, stocks, GameStop, or inflation. The Bitcoin group received data on performance over the previous 12 months. The information shifted both intentions and actual behavior.

The study also tracked spending. A doubling of Bitcoin's price raised the likelihood of purchasing durable goods by 1.4 percentage points for households with all their investments in crypto. The effect didn't extend to routine spending. People aren't running out to buy groceries because Bitcoin went up; they're buying washing machines or cars. This is windfall behavior, the same pattern seen with lottery winnings.

Crypto owners also see their holdings as less risky than non-owners do. The researchers said that divergence in perceived risk, combined with the gap in expected returns, helps explain why the two groups talk past each other.

The paper concludes that retail crypto demand responds to recent information about past prices. A price spike generates positive return stories. Those stories reach people who cited information gaps as their reason for staying out. They buy in, and demand rises further. The researchers see that cycle in the data.

GameStop, one of the information treatments in the study, carries an Alpha Score of 41/100 with a Mixed label on AlphaScala's stock page.

The person most likely to enter the market is the one who just heard something impressive about last year's Bitcoin returns, regardless of age or income, the researchers said.