A working paper published by the Federal Reserve Bank of Cleveland suggests that cryptocurrency investors are driven less by traditional demographic characteristics and more by radically different beliefs regarding future returns. The study aims to explain why digital assets behave differently from conventional financial assets and how market rallies can attract new participants.
Researchers Michael Weber, Bernardo Candia, Olivier Coibion, and Yuriy Gorodnichenko analyzed repeated household surveys involving up to 25,000 U.S. households per wave. Their paper, titled “Do You Even Crypto, Bro? Cryptocurrencies in Household Finance,” found that return expectations explain variations in cryptocurrency ownership far more than standard demographic metrics such as age, income, and gender.
Among respondents willing to make a forecast, crypto owners anticipated an average return of 22% over the following year, compared to just 7% among non-owners. Furthermore, a one-percentage-point increase in an individual's expected return was associated with a 0.8-percentage-point increase in the probability of owning cryptocurrency. This dynamic sets digital assets apart from stocks, bonds, and gold, where demographics and financial attributes typically hold more explanatory power.
Despite these differences in expectations, the study identified specific demographic trends. Individuals 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 crypto than women, and higher-income households showed greater participation.
The research also utilized a randomized information experiment in 2025 to observe how households reacted to past performance data. Participants who were provided with information regarding Bitcoin's previous 12-month return increased their desired crypto portfolio allocation by roughly 2 percentage points, leading to a subsequent rise in actual purchases. This response was primarily concentrated among individuals who previously stated they did not own crypto due to a lack of information.
Additionally, the study examined the impact of crypto wealth on consumer spending. Researchers observed that a doubling in Bitcoin's price increased the likelihood of a household with an all-crypto portfolio purchasing a durable good by 1.4 percentage points, though this effect did not extend to ordinary spending. The authors concluded that crypto gains are often treated similarly to lottery winnings or gambling income rather than a permanent increase in wealth.
Ultimately, the authors note that cryptocurrency remains poorly understood by a large portion of the population. In their 2021 survey, 87% of non-owners and 54% of owners stated they did not know what return to expect. The researchers concluded that the absence of common information and beliefs among investors indicates that price volatility will remain a defining feature of the asset class.
