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Why Beliefs Beat Demographics in Crypto Ownership, Fed Paper Shows
Crypto holders expected a 22% annual return versus 7% for non-holders, a Cleveland Fed paper finds. Expected returns and perceived risk explain twice as much ownership as demographics.
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A working paper from the Cleveland Federal Reserve upends the usual demographic story about crypto ownership. What matters most, the researchers found, is not how old you are or how much you earn. It's what you think the return will be over the next twelve months.
The paper, titled "Do You Even Crypto, Bro? Cryptocurrencies in Household Finance," uses quarterly surveys of 15,000 to 25,000 U.S. households from 2018 through early 2025. The authors – economists Michael Weber, Bernardo Candia, Olivier Coibion and Yuriy Gorodnichenko – compared crypto holders with owners of stocks and gold.
In 2021, 87% of households that did not own crypto said they did not know what return to expect over twelve months. Among holders, that share was 54%. Those who made a forecast expected a 22% annual return. Non-holders expected 7%. That gap was the widest across all assets studied.
Each additional percentage point of expected return lifted the probability of holding crypto by 0.8 points, the researchers said. Expected returns and perceived risk together explained roughly twice as much variation in ownership as all observable characteristics – age, income, education, gender.