Fed Study: Crypto Ownership Driven by Return Expectations, Not Demographics

A recent study by the Federal Reserve Bank of Cleveland has revealed that cryptocurrency ownership in the U.S. is primarily driven by investors' expectations of future gains.

The research, which examined household behavior, found that the expected return on investment explains more variation in crypto ownership than demographic traits such as age, income, or gender.

Crypto owners tend to forecast higher returns, with an average 22% annual return compared to 7% for non-owners. A one-percentage-point increase in expected crypto return is associated with a 0.8-percentage-point increase in the probability of owning cryptocurrency.

The study also showed that informing households about Bitcoin's previous year performance can significantly impact their desired allocation and actual purchases of cryptocurrencies, especially among those who lack information. The researchers found that providing such information raised desired crypto allocation by 47% and actual purchases by 2.5 percentage points.