A Federal Reserve Bank of Cleveland working paper published on July 14, 2026 reveals that Bitcoin's previous performance significantly influences cryptocurrency ownership decisions among U.S. households. According to the study by researchers Michael Weber, Bernardo Candia, Olivier Coibion and Yuriy Gorodnichenko, crypto owners expected 22% annual returns compared to 7% among surveyed people without digital holdings. The research examined recurring surveys containing between 15,000 and 25,000 responses per wave drawn from the Nielsen Homescan Panel, with a randomized information experiment conducted during the second quarter of 2025. The study, titled 'Do You Even Crypto, Bro?' drew on repeated large-scale surveys of U.S. households participating in the Nielsen Homescan Panel from 2018 through 2025.
The study found that households shown Bitcoin's trailing 12-month return raised their desired crypto allocation by approximately two percentage points, representing a 47% increase from the control group's average desired allocation of 4.3%. Participants exposed to Bitcoin return information were 2.5 percentage points more likely to purchase cryptocurrency in later survey waves, with the treatment raising the unconditional probability of buying crypto by about 23%. Before the treatment, roughly 11% of participants held cryptocurrency, and the response was strongest among nonowners who previously cited limited knowledge as their reason for avoiding cryptocurrency. The researchers concluded that expected returns alone explained more variation in ownership than all observable household characteristics combined, with the single expectation explaining more variation than all demographic factors combined. As reported by Cointelegraph and CryptoBriefing, the study suggests that crypto investors update their expectations quickly when returns change, with a period of strong performance reinforcing optimistic beliefs while a downturn can just as quickly shake confidence.
The research reveals significant demographic differences between crypto holders and non-holders. Crypto holders skew younger, male, higher-income, and more libertarian or politically independent compared to non-holders, according to the study. Age was the single strongest demographic predictor, with those under 40 being 13 percentage points more likely to own bitcoin than those over 60. About 20% of holders reported that bitcoin and other digital assets made up at least half of their financial portfolio. Perhaps more revealing is the risk perception gap, where crypto holders view digital assets as safer than non-holders believe them to be. The difference in return expectations remains substantial, with owners expecting 13.8% return in 2025 and nonowners expecting 4.7%, and each additional percentage point in expected returns was associated with a 0.8-percentage-point increase in the probability of owning cryptocurrency. Non-holders' most common reason for avoiding bitcoin was simply a lack of knowledge about crypto.
The study's most significant contribution lies in its findings about belief-driven trading rather than fundamentals shaping much of retail crypto behavior. As reported by Cointelegraph and CryptoBriefing, the research suggests that crypto markets may be more sentiment-driven than markets for traditional assets like equities or bonds. Where stock investors often anchor decisions to earnings reports or macroeconomic data, crypto investors appear to rely more heavily on price momentum itself. This pattern points to a feedback loop between price action and investor sentiment, with the study noting that belief formation plays a central role in investor behavior that are not fixed and shift in response to recent returns. The findings carry implications for regulatory discussions about investor protection, especially regarding volatility and return-chasing behavior among retail participants. If confirmed by further research, the Cleveland Fed's findings could influence how regulators approach retail investor protection in crypto markets, as belief-driven trading tied closely to recent returns may reinforce concerns about rapid sentiment reversals during market downturns.
Overall bitcoin ownership among U.S. households rose from under 2% in 2018 to roughly 12% by 2025, holding steady even through sharp price drawdowns. The authors warned that this dynamic could feed speculative cycles: 'High rates of return for a new speculative asset lead new investors to expect similarly high rates in the future and help draw in a growing number of new investors seeking similarly high returns.' Compared to stocks, bonds, and gold, bitcoin stood out for how differently holders and non-holders perceived it — a gap that did not exist for traditional assets. The study's findings suggest that while Bitcoin is the most commonly held cryptocurrency, most individuals who own crypto own multiple currencies, indicating a diversified approach to digital asset investments. The timing of the study's release adds to ongoing conversations about crypto market maturity, as institutional adoption grows and more traditional financial firms enter the space, with questions about the underlying drivers of retail behavior remaining relevant for policymakers trying to assess systemic risk in digital asset markets.
