Beliefs on Returns Drive Cryptocurrency Ownership

A study by the Federal Reserve Bank of Cleveland has found that people's expectations about future returns influence their decision to invest in cryptocurrency.

The researchers surveyed up to 25,000 US households per wave and discovered that crypto owners expected an average 22% return over the next year, compared with 7% among non-owners.

This difference in expected returns strongly influenced crypto ownership across surveyed households, with a one-percentage-point increase in expected returns linked to a 0.8-percentage-point rise in ownership probability.

The study also found that showing people Bitcoin's past returns increased both planned allocations and later crypto purchases, with a two-percentage-point rise in planned allocations after being shown the previous 12-month return.