Bitcoin price gains can draw new buyers into crypto by lifting expectations for future returns, a Federal Reserve Bank of Cleveland experiment found.
According to the report, participants shown Bitcoin’s previous 12-month performance became more bullish on crypto. They were about 2.5 percentage points more likely to own it in a later survey, researchers found. With roughly 11% of respondents owning crypto before the experiment, that change amounted to about a 23% increase in the likelihood of ownership.
The results offer rare experimental evidence for a dynamic long associated with speculative markets: past gains can influence what investors expect next and, in turn, where they put their money.
Researchers also found that the response was strongest among people with limited knowledge of crypto. That suggests rallies may have the greatest pull on potential investors who have yet to form strong views about the asset class.
The findings come from Do You Even Crypto, Bro? Cryptocurrencies in Household Finance, a July 2026 working paper by Michael Weber, Bernardo Candia, Olivier Coibion and Yuriy Gorodnichenko.
The Cleveland Fed classifies the study as a working paper, meaning the research is preliminary. The views expressed are those of the authors and do not represent the Federal Reserve Bank of Cleveland or the Federal Reserve System.
Recent gains changed what investors expected next
The experiment found that Bitcoin’s past performance altered expectations before it changed actual ownership.
During the second quarter of 2025, researchers divided participants into groups and provided them with different pieces of financial information.
One group was told Bitcoin had returned 14.3% over the previous 12 months. Another was shown a Bitcoin price chart covering the same period.
Separate groups received information about the S&P 500, GameStop, or the Federal Open Market Committee’s inflation outlook, while a control group received no additional information.
Participants told Bitcoin’s exact return raised their expected crypto return for the following year by 3.2 percentage points relative to the control group. Those shown the Bitcoin chart increased their expected return by about 1.2 percentage points.
Higher expectations changed desired portfolios
That shift fed directly into desired portfolios.
The Bitcoin treatments increased the amount respondents wanted to allocate to crypto by about 2 percentage points from a control-group average of 4.3%, almost half the starting allocation.
Most of the additional exposure came from money respondents would otherwise have kept in checking, savings, or cash accounts.
The researchers later surveyed the participants again to see whether the shift in expectations translated into actual investment decisions.
Participants who received Bitcoin’s return information were 2.41 percentage points more likely to report owning crypto. Participants who saw the Bitcoin price chart were 2.48 percentage points more likely to own it.
Because relatively few respondents changed their ownership status between surveys, the researchers combined the two Bitcoin treatment groups. The pooled result was statistically significant, with a p-value of 0.017.
The result gives the experiment more weight than a simple survey showing that crypto investors tend to be bullish. Researchers randomly assigned participants to information groups. This allowed them to trace changes in expectations and subsequent ownership back to what participants had been shown.
Still, the experiment does not establish that every Bitcoin rally will generate the same level of new demand or quantify how much those purchases could move prices.
Other assets showed weaker spillover
There was also some evidence that rising enthusiasm for one risk asset can spill into others.
Participants who saw S&P 500 information were also more likely to own crypto later. Those who received the GameStop chart increased their desired crypto allocation, but the change did not produce a statistically significant difference in subsequent ownership.
The Bitcoin treatments, however, generated the clearest chain from new information to higher expected crypto returns and then to greater desired exposure.
Crypto owners see a very different return profile
The experimental results reinforce a much broader divide between crypto holders and non-holders that appeared across years of household surveys.
The research used data from the Nielsen Homescan Panel, which tracks tens of thousands of US households and their spending behavior.
Crypto ownership climbed rapidly during the last market cycle, rising from roughly 3% of respondents in 2021 to about 11% in 2022 and around 12% by mid-2023.
Ownership later declined by several percentage points before recovering to roughly 12% as Bitcoin traded above $120,000 in 2025.
Age produced the widest demographic gap.
After controlling for other characteristics, people under 40 were 13 percentage points more likely to own crypto than respondents over 60. Men were roughly 4 percentage points more likely to own it than women.
Higher income, employment and financial wealth were also associated with crypto ownership.
But demographic differences explained less than investors’ beliefs about what crypto would return and how risky it was.
In a 2021 survey, crypto holders expected the asset class to return about 22% over the next year. Non-holders expected roughly 7%.
A similar gap remained in 2025. Owners expected returns of 13.8%, while non-owners forecast about 4.7%.
The researchers found that expected returns and perceived risk had around twice the explanatory power of detailed demographic characteristics when accounting for who owned crypto.
That divide was much less pronounced for stocks, bonds and gold.
Knowledge mattered more than demographics
Knowledge also separated owners from people staying on the sidelines.
About 40% of non-owners said they knew little about cryptocurrency. Close to 90% of that group would not provide a numerical forecast for expected returns.
Those less-informed respondents were among the most responsive when researchers later gave them Bitcoin information.
By contrast, people who already considered crypto a poor investment changed their desired allocations much less.
The pattern suggests strong price performance may be most effective at pulling in investors who are undecided rather than those who have firmly rejected the asset class.
Crypto wealth also changes spending behavior
The same research found that Bitcoin gains can affect what crypto-owning households buy outside financial markets.
Bitcoin price gains were associated with increased purchases of durable goods among households with crypto exposure.
The researchers estimated that a hypothetical household holding its entire financial portfolio in crypto would be 1.4 percentage points more likely to purchase a durable good if Bitcoin’s price doubled. The estimate applied to purchases during that quarter.
The clearest effects appeared in large, occasional purchases such as computers and refrigerators.
Researchers found less evidence of a sustained increase in recurring expenses such as food, utilities, and other nondurable goods.
The spending effect also faded by the following quarter.
That differs from the pattern associated with traditional financial wealth, where gains in stocks and bonds showed a stronger relationship with routine consumption.
The authors compared the crypto response with how households spend temporary windfalls, including gambling proceeds, where gains are more likely to fund one-time purchases than permanently raise consumption.
The household findings add another layer to the feedback mechanism identified in the experiment.
Rising Bitcoin prices can increase paper wealth for existing holders. They can also change expectations among potential buyers. Those expectations can shift portfolio preferences and, in some cases, lead to new crypto ownership.
The authors said extrapolating recent returns into the future is one mechanism that can contribute to asset-price bubbles.
The experiment does not determine whether Bitcoin is overvalued or prove that new retail buyers are responsible for sustaining rallies. Instead, it shows only how information about past gains can change investment behavior.
