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Key Takeaways
- Respondents told about Bitcoin’s 12-month return were 2.41 percentage points more likely to report owning crypto later, a roughly 23% increase over the 11% baseline ownership rate
- The effect was strongest among households who had avoided crypto due to lack of knowledge, with no significant effect on those who already viewed it as a poor investment
- Researchers say the findings illustrate a feedback mechanism where rising prices attract new buyers, who in turn raise expected returns and push demand higher still
A Federal Reserve Bank of Cleveland working paper found that showing U.S. households Bitcoin’s prior-year returns made them significantly more likely to report owning crypto in a later survey. The study offers direct experimental evidence that past price gains can pull new investors into the market rather than merely correlating with existing sentiment.
Researchers Tested How Information About Returns Shapes Behavior
The Cleveland Fed researchers randomly divided participants in a 2025 survey into a control group and six treatment groups. Each treatment group received different information: Bitcoin’s return over the prior year, a price chart of Bitcoin, similar data for the S&P 500 or GameStop, or the Federal Reserve’s inflation forecast, according to the paper.
Bitcoin traded near $77,538 as of the study’s publication. One treatment group was told that Bitcoin had gained 14.3% over the previous 12 months. A separate group was shown only a price chart rather than a specific return figure.
The design let researchers isolate how information about past performance, rather than general awareness of crypto markets, affects household behavior.
The ownership analysis covered 5,352 respondents surveyed across the second through fourth quarters of 2025, and the researchers controlled for whether each respondent already owned crypto before receiving the information.
Exposure to Bitcoin’s Gains Raised Reported Ownership by 23%
Respondents told about Bitcoin’s 12-month return were 2.41 percentage points more likely to report owning crypto in a follow-up survey. Those shown the price chart alone saw a comparable 2.48 percentage point increase. About 11% of respondents owned crypto before the experiment, making the increase roughly 23% relative to that starting rate.
The measure captured self-reported ownership rather than verified transaction data, a distinction the researchers noted directly in the paper.
The treatments also raised respondents’ desired crypto allocation immediately, increasing it by about 2 percentage points from a 4.3% average among the control group.
Respondents largely funded that shift by reducing their planned allocation to cash, checking and savings accounts, while modestly raising their planned stock holdings. Being told about Bitcoin’s positive return raised expected returns over the following year by 3.2 percentage points compared with the control group, while the price chart alone raised expectations by 1.2 points.
Effect Concentrated Among Households Unfamiliar With Crypto
The response to Bitcoin’s returns was strongest among respondents who said they had avoided crypto specifically because they lacked knowledge about it. The combined Bitcoin treatments produced no statistically significant effect on respondents who already viewed crypto as a poor investment, according to the paper.
A chart showing the S&P 500’s performance also increased subsequent crypto ownership among respondents, though stock-return information did not change respondents’ desired portfolio allocations the way Bitcoin information did.
The researchers said the finding suggests some spillover effect from general market optimism, distinct from the more targeted allocation shift produced by Bitcoin-specific data.
Findings Point to a Feedback Mechanism Behind Speculative Rallies
The paper’s authors wrote that positive returns attract new participants, which raises the price further.
The researchers said respondents who saw evidence of past high returns did not appear to expect a subsequent reversion toward historical averages, instead tending to extrapolate recent performance into their forward-looking expectations.
The authors described the results as illustrating one mechanism through which speculative bubbles can develop: rising prices draw in new buyers, those buyers raise expected future returns, and the resulting demand can push prices higher still.
The paper does not claim this mechanism alone explains Bitcoin’s price movements, and the researchers frame the finding as one contributing factor within household financial decision-making rather than a complete model of crypto market dynamics.
