Karla Barker 
A new working paper from the Federal Reserve Bank of Cleveland suggests something unusual about crypto owners. They are not just younger or more risk-tolerant. They hold very different beliefs about what digital assets will return in the future.
The paper, based on repeated surveys of up to 25,000 U.S. households, finds that expected returns explain more of who owns crypto than age, income, or gender. That is the opposite of what researchers usually see with stocks, bonds, or gold. For traditional assets, demographics and financial profiles matter more. For crypto, beliefs matter more.
Returns, not demographics, drive ownership
Among people willing to make a forecast, crypto owners expected an average 22% return over the next year. Non-owners expected only 7%. Owners also saw crypto as less risky. A one-point increase in expected return raised the chance of owning crypto by about 0.8 percentage points.
The authors also ran a randomized experiment. In 2025, some households were shown Bitcoin’s previous 12-month return. That information raised their desired crypto allocation by about two percentage points, and actual purchases rose as well. The effect showed up mainly among people who said they lacked enough information about crypto. People who already thought crypto was a bad investment mostly ignored the prompt.
That points to a possible loop. Past gains bring in new buyers. New buying pushes prices higher. Higher prices then attract more attention and more buyers. The authors suggest this could be one mechanism behind speculative swings.
Crypto gains act like gambling income
The paper also looks at spending. When Bitcoin’s price doubled, households with all their financial wealth in crypto became a bit more likely to buy durable goods. But the effect did not show up in everyday spending. The researchers compare this to how people treat gambling income or lottery winnings. It feels different from a permanent increase in wealth.
The broader point is that crypto prices may be shaped by disagreement and learning, not just fundamentals. Many people still have no idea what return to expect from crypto. In the 2021 survey, 87% of non-owners said they did not know. Even among owners, 54% said the same.
The authors write that because investors lack common information and beliefs about crypto, price volatility will probably remain a defining feature for some time. For the market, that is an uncomfortable thought. The next wave of retail interest may depend less on Bitcoin’s price alone and more on what people are told about how it performed in the past.