Fed Reserve Study: Crypto Owners Expect 22% Returns While Non-Owners See Just 7%

A Federal Reserve Bank of Cleveland study dropped a pretty clear finding: what people *believe* about crypto returns matters more than almost anything else in determining whether they actually buy in. Age, income, gender — all of it takes a back seat to expectations.

The researchers — Michael Weber, Bernardo Candia, Olivier Coibion, and Yuriy Gorodnichenko — pulled data from up to 25,000 US households. Their paper, titled “Do You Even Crypto, Bro? Cryptocurrencies in Household Finance,” ran randomized information experiments to see what happens when you give ordinary people specific data about Bitcoin’s past performance. The short answer: it moves them. People who got Bitcoin return information increased their desired crypto allocations by roughly 2 percentage points — a 47% jump from the control group’s baseline of 4.3%. And it wasn’t just wishful thinking. Actual purchases rose by 2.5 percentage points too. The effect hit hardest among people who had previously said they stayed out of crypto because they didn’t know enough about it. Give them information, they buy.

Not a small finding.

Beliefs Drive Ownership More Than Demographics

The numbers on expected returns are kind of wild. Crypto owners, on average, expect a 22% return over the following year. Non-owners? Seven percent. That’s not a small gap — it’s a chasm, and it probably explains a lot about why the two groups behave so differently. For every one-percentage-point increase in an individual’s expected return on crypto, there’s a corresponding 0.8-percentage-point increase in the likelihood of owning it. That relationship is sharper than what you see with stocks or bonds, where demographic and financial background tend to do more of the heavy lifting in predicting ownership.

Demographics still matter, just less than you’d think. People under 40 are 13 percentage points more likely to own crypto than those over 60, even after controlling for other factors. Men lean into crypto more than women. Wealthier households participate at higher rates. But strip all that away, and beliefs about returns are still the dominant variable. That’s the core of what the researchers found, and it’s a meaningful departure from how most traditional asset classes work.

The experiment itself ran in 2025. Households were randomly assigned information about Bitcoin, stocks, GameStop, or inflation. The Bitcoin group got data on performance over the previous 12 months. That was enough to shift both intentions and actual behavior — which says something uncomfortable about how reactive crypto demand really is to recent price history.

Gambling Income, Durable Goods, and Volatile Demand

There’s a consumption angle here too. The study found that crypto wealth gets treated more like “gambling income” than a stable financial asset. A doubling of Bitcoin’s price raised the likelihood of purchasing durable goods by 1.4 percentage points for households with all their investments in crypto. But that effect didn’t extend to routine everyday spending. People aren’t running out to buy groceries because Bitcoin went up — they’re buying washing machines or cars. It’s windfall behavior, basically the same pattern you see with lottery winnings. The wealth feels real enough to justify a big purchase, but not reliable enough to change how someone budgets month to month.

Related: Retail Traders Show Caution as Bitcoin Dominance Holds Amid Flat Crypto Weekend

That’s a pretty telling sign of how crypto wealth is perceived, even by the people who hold it.

The risk perception gap is also worth sitting with. Crypto owners see their holdings as less risky than non-owners do. That divergence in perceived risk, combined with the massive gap in expected returns, probably explains why the two groups talk past each other constantly. They’re not working from the same mental model of what this asset class actually is.

What This Means for Future Crypto Demand

The broader takeaway from the paper is that retail crypto demand isn’t just a function of where prices are right now. It’s a function of what people have recently heard about where prices *were*. Past performance information — shared widely, shared fast — can pull in new buyers. And when prices fall, that same mechanism works in reverse. The lack of any unified understanding of crypto among investors is probably a structural feature of the market at this point, not a bug that gets fixed as the space matures.

So volatility feeds on itself. A price spike generates positive return stories, those stories reach people who cited information gaps as their reason for staying out, those people buy in, and demand rises further. The researchers see that cycle pretty clearly in the data.

Related: Dollars Future Hangs on Treasury Yields and Fed Credibility Amid Market Turmoil

Men under 40 with higher incomes are still the most likely crypto holders. But the study’s real point is that demographic targeting only gets you so far in predicting who buys crypto next. The person most likely to enter the market is the one who just heard something impressive about last year’s Bitcoin returns — regardless of how old they are or how much they make.

Crypto owners anticipate 22% annual returns. Non-owners expect 7%.

Hub: Bitcoin price, news, and analysis