What actually makes someone buy crypto? According to a new Federal Reserve working paper, the answer
has less to do with cold analysis and more to do with belief — and those beliefs are surprisingly easy
to nudge.
As reported by Cointelegraph, the study comes out of the Federal Reserve Bank of Cleveland and was
authored by economists Michael Weber, Bernardo Candia, Olivier Coibion and Yuriy Gorodnichenko. The
researchers surveyed up to 25,000 US households per wave and ran a randomized information experiment in
2025 to test how information about Bitcoin’s performance changes investor behavior.
Optimists own more
The gap in expectations between crypto owners and everyone else is stark. Crypto owners anticipated
average annual returns of about 22%, compared with roughly 7% for non-owners. Yet a great deal of
uncertainty runs underneath those numbers: in a 2021 survey, 87% of non-owners could not even estimate
expected returns, and 54% of crypto owners were also unsure.
Crucially, those expectations track ownership closely. The paper finds that each one-percentage-point
increase in expected crypto returns was associated with a 0.8-percentage-point higher probability of
owning crypto. Expected returns, the researchers report, explained more of the variation in ownership
than demographic factors did.
Demographics still matter at the margins. People under 40 were 13 percentage points more likely to own
crypto than those over 60, men were about 4 percentage points more likely to own than women, and
higher-income, wealthier households were more likely to participate.
Show them the rally, watch them buy
The most striking result came from the experiment itself. When households were simply shown Bitcoin’s
performance over the previous 12 months, their desired crypto allocation rose by roughly 2 percentage
points — a 47% increase relative to a control group — and their actual purchases climbed by about 2.5
percentage points.
That finding lends empirical weight to a familiar dynamic. As the paper puts it, “positive returns
attract new participants, which raises the price further,” describing a feedback loop in which
performance itself becomes marketing. It suggests that the reflexive, momentum-driven booms crypto
markets are known for may be baked into how ordinary investors form their expectations, rather than
being the work of speculators alone.
For regulators and platforms, the implication cut two ways: the same information that helps people
understand an asset can also prime them to chase it. The Cleveland Fed’s work, relayed here via
Cointelegraph, is a reminder that in crypto, sentiment is not just noise around the price — it is a
large part of the engine.
Written for Red Robot with AI assistance and human editing. Based on reporting by Cointelegraph.
