Information about Bitcoin's previous gains can change how much cryptocurrency U.S. households want to own and whether they subsequently buy it, according to a Federal Reserve Bank of Cleveland working paper published on July 14, 2026.
The Key Findings
Researchers Michael Weber, Bernardo Candia, Olivier Coibion, and Yuriy Gorodnichenko examined recurring surveys containing between 15,000 and 25,000 responses per wave. The study found that households shown Bitcoin's trailing 12-month return raised their desired crypto allocation by about two percentage points, representing a 47% increase from the control group's average desired allocation of 4.3%.
Participants exposed to Bitcoin return information were also about 2.5 percentage points more likely to purchase cryptocurrency in a later survey wave. Before the treatment, roughly 11% of participants held cryptocurrency. The treatment raised the unconditional probability of buying crypto by about 23%.
Expectations Drive Ownership
The researchers found a wide gap between how owners and nonowners viewed crypto. In the third quarter of 2021, owners expected an average return of 22% over the following year, while nonowners expected 7%. Uncertainty was widespread in both groups, with about 87% of nonowners selecting don't know when asked to estimate crypto's next-year return.
Expected returns had a stronger statistical relationship with ownership than observable personal characteristics. Each additional percentage point in expected returns was associated with a 0.8-percentage-point increase in the probability of owning cryptocurrency. The difference remained in 2025, although both groups produced lower forecasts: owners expected 13.8% and nonowners expected 4.7%.
The Price Feedback Loop
The results support a possible mechanism through which rising prices attract new market participants. Strong historical returns can lift expectations, encourage purchases, and potentially create additional demand. Positive returns attract new participants, which raises the price further, the authors wrote. They presented this as a possible bubble mechanism, not a forecast that every Bitcoin rally will become self-reinforcing.
The finding aligns with evidence that investor attention often follows market performance. Retail interest typically returns after renewed Bitcoin momentum, while periods of falling prices coincide with lower search activity.
Crypto Gains Affect Household Spending
The paper also examined whether Bitcoin price changes influenced spending. Doubling Bitcoin's price made a household with its entire financial portfolio in crypto 1.4 percentage points more likely to buy a durable good, representing a 7% increase relative to the unconditional probability. The response was strongest for products such as computers and refrigerators and weaker for cars and homes.
The researchers found little corresponding change in nondurable spending, interpreting this as evidence that households may treat crypto gains more like lottery winnings than a permanent increase in wealth. The paper is preliminary research and its findings represent the authors, not official Federal Reserve policy.
