A working paper from the Federal Reserve Bank of Cleveland says cryptocurrency ownership is explained less by standard demographic traits than by what people believe digital assets will return in the future, offering a possible reason crypto behaves so differently from stocks, bonds, and gold.
The study argues that Americans who buy crypto are not simply a distinct group in terms of age, income, or appetite for risk. The sharper divide lies in expectations. People who own crypto and people who do not hold markedly different views on future returns and risk, and those differences appear to matter more than many observable household characteristics.
According to the paper, that gap in beliefs may help explain two persistent features of the crypto market: high volatility and the tendency for rallies to pull in fresh buyers. If rising prices lift expectations, and those expectations lead to new purchases, price gains can feed on themselves.
The paper, titled Do You Even Crypto, Bro? Cryptocurrencies in Household Finance, was written by Michael Weber, Bernardo Candia, Olivier Coibion, and Yuriy Gorodnichenko. It draws on repeated surveys of as many as 25,000 US households in each wave. The authors found that expectations for crypto returns account for more of the variation in ownership than a broad set of demographic measures.
The researchers also ran a randomized information experiment showing that simply providing information about Bitcoin’s recent performance can change both portfolio preferences and actual buying behavior.
Large gaps in expected returns and risk
The paper says cryptocurrency remains poorly understood by much of the public. In the researchers’ 2021 survey, 87% of people who did not own crypto said they did not know what return to expect from it over the following year. Even among crypto owners, 54% said the same.
Among respondents willing to make a forecast, the split was wide. Crypto holders expected an average return of 22% over the next year, while non-owners expected 7%. Holders also tended to see crypto as less risky than non-owners did.
The authors found that expected returns had unusual power in explaining ownership. A 1 percentage point increase in a person’s expected crypto return was associated with a 0.8 percentage point increase in the probability of owning cryptocurrency. Taken together, expectations for returns and risk explained considerably more of the variation in ownership than characteristics such as age, income, and gender.
That makes crypto unusual relative to traditional assets. For stocks, bonds, and gold, demographic and financial characteristics generally carry more explanatory power than differences in expected returns. In crypto, the paper says, that relationship is reversed.
Who is more likely to own crypto
The paper still identifies a distinct demographic profile among crypto investors. After controlling for other characteristics, people under 40 were 13 percentage points more likely to own cryptocurrency than people over 60. Men were about 4 percentage points more likely than women to hold crypto. Higher-income households and wealthier households were also more likely to participate.
Bitcoin return information changed allocations and purchases
The experiment may carry the most direct implications for the market. In 2025, the researchers randomly assigned households to receive information about Bitcoin, stocks, GameStop, or inflation.
Participants who were shown Bitcoin’s previous 12-month return increased their desired crypto allocation by roughly 2 percentage points. Relative to the 4.3% desired allocation in the control group, that was about a 47% increase. Their actual subsequent crypto purchases also rose by about 2.5 percentage points.
The authors described the result this way: 「providing information about recent Bitcoin returns induces some households to start buying cryptocurrency.」
The effect was concentrated among respondents who said they did not own crypto because they lacked enough information. Those who already believed crypto was a bad investment generally did not respond to the information treatment.
Past gains may pull in new buyers
The paper says the findings point to a mechanism often associated with speculative bubbles. Past gains can attract new investors, and those purchases can push prices higher and draw in more buyers.
As the authors wrote, 「Positive returns attract new participants, which raises the price further.」
That result stands out because the asset class is still not well understood across a large share of the population. With no common base of information or beliefs across investors, the market may be especially sensitive to messages about prior returns.
Crypto wealth affected durable-goods buying, not ordinary spending
The study also examined whether crypto gains spill over into household consumption. A doubling in Bitcoin’s price made a household whose entire financial portfolio was in crypto 1.4 percentage points more likely to buy a durable good. The paper says that was equivalent to roughly a 7% increase relative to the unconditional probability of such a purchase.
The effect did not persist in ordinary spending.
That led the researchers to compare crypto gains to 「gambling income」 or lottery winnings rather than to a permanent increase in household wealth.
Volatility may remain a defining trait
The broader conclusion is that crypto volatility may stem in part from disagreement and learning, not only from market fundamentals. The authors say cryptocurrency stands out because it is poorly understood, investors hold sharply different views about its prospects, and new information about past returns can change expectations and behavior at the same time.
They wrote that 「The absence of common information and beliefs about crypto across investors suggests that price volatility will continue to be one of the most defining characteristics of this new asset for the foreseeable future.」
For crypto markets, the implication is uncomfortable but clear. The next wave of retail demand may depend not only on Bitcoin’s current price, but also on what prospective investors are told about the price action that came before it.