Fed Study Links Crypto Ownership to Return Expectations and Information Effects

A new working paper from the Federal Reserve Bank of Cleveland reveals that expectations of future returns, rather than demographic traits, are the strongest predictor of cryptocurrency ownership among U.S. households.

Return expectations dominate ownership decisions

Using repeated surveys of up to 25,000 households per wave, researchers found that a one‑percentage‑point increase in an individual’s expected crypto return raises the probability of owning crypto by 0.8 percentage points. Expected returns explained more variation in ownership than age, income, gender, or other observable characteristics.

Owners vs. non‑owners

• Crypto owners anticipate an average 22% return over the next year, compared with 7% among non‑owners.
• Owners view crypto as less risky than non‑owners do.
• 87% of non‑owners and 54% of owners reported not knowing what return to expect from crypto in 2021.

Demographic profile remains distinctive

Even after controlling for other factors, younger adults (under 40) are 13 percentage points more likely to own crypto than those over 60. Men are about 4 percentage points more likely than women, and higher‑income households show greater participation.

Information experiment shows behavioral impact

In a 2025 randomized experiment, households shown Bitcoin’s 12‑month return increased their desired crypto allocation by roughly 2 percentage points (a 47% rise over the control group’s 4.3% target) and raised actual crypto purchases by about 2.5 percentage points. The effect was strongest among respondents who cited lack of information as a barrier to ownership.

Spillover to consumption

A doubling of Bitcoin’s price made households with fully crypto‑based portfolios 1.4 percentage points more likely to purchase a durable good, roughly a 7% increase relative to the baseline probability. The effect did not extend to ordinary spending, suggesting crypto gains are treated more like lottery winnings than lasting wealth.

Implications for volatility

The authors argue that the absence of common information and divergent beliefs about crypto returns can fuel feedback loops: positive returns attract new investors, pushing prices higher and reinforcing bullish expectations. This dynamic may help explain crypto’s persistent volatility compared with traditional assets where demographics and financial characteristics dominate ownership patterns.