Crypto Investors Driven by Beliefs, Not Demographics

A new study from the Federal Reserve Bank of Cleveland has found that cryptocurrency investors are driven by their beliefs about digital assets' future returns, rather than demographic characteristics or risk appetites.

The researchers used repeated surveys of up to 25,000 US households per wave and found that expectations about crypto returns explain more of the variation in who owns cryptocurrency than a broad range of demographic characteristics.

In fact, for those willing to make a forecast, crypto owners expected an average 22% return over the following year, compared with just 7% among non-owners. Owners also tended to view crypto as less risky than non-owners did.

The study suggests that this dynamic could lead to speculative bubbles, where past gains attract new investors, whose purchases push prices higher and potentially attract still more buyers.