Fed study finds Bitcoin returns can spur crypto buying

A working paper from the Federal Reserve Bank of Cleveland shows that information about Bitcoin’s recent returns can shift U.S. households’ desired crypto allocations and increase actual purchases.

Expected returns drive ownership

Survey respondents who already owned cryptocurrency expected an average 22% annual return in 2021, while non‑owners expected only 7%. By 2025 the gap narrowed but remained sizable (owners 13.8% vs. non‑owners 4.7%). Each additional percentage point in expected return was associated with a 0.8‑percentage‑point rise in the probability of owning crypto.

Randomized experiment on Bitcoin performance

During the second quarter of 2025, participants were randomly shown either Bitcoin’s 12‑month return (14.3%) or a price chart. Both treatments raised desired crypto allocations by roughly two percentage points – a 47% increase over the control group’s average of 4.3%.

The same participants were 2.5 percentage points more likely to buy cryptocurrency in a later survey wave, raising the unconditional purchase probability by about 23%.

Broader asset allocation effects

Exposure to Bitcoin performance also nudged respondents to increase allocations to stocks, while reducing cash, checking, and savings balances, suggesting a broader appetite for riskier assets.

Potential feedback loop

The authors note that strong historical returns may create a feedback loop: higher prices boost expectations, which spur purchases, potentially pushing prices higher still. They describe this as a possible bubble mechanism, not a deterministic outcome.

Spending implications

Doubling Bitcoin’s price was estimated to raise the likelihood that a household fully invested in crypto would purchase a durable good (e.g., computer, refrigerator) by 1.4 percentage points – a 7% increase relative to the baseline. No significant effect was found for nondurable spending.