A new working paper from the Federal Reserve Bank of Cleveland argues that the main reason cryptocurrencies don’t behave like other financial assets may have less to do with demographics and more to do with beliefs. According to the authors, Americans who own crypto—and those who plan to buy—often hold sharply different expectations about what digital assets will return, and those expectations help explain who participates in the market in the first place.

The paper also presents experimental evidence suggesting that information about Bitcoin’s recent performance can meaningfully change what households say they want to hold, and can translate into higher actual purchases. If those findings are broadly applicable, they offer a mechanism for why crypto can stay volatile and why rallies can pull in new buyers in a reinforcing loop.

Key takeaways

• Beliefs about future crypto returns explain participation better than standard demographics, according to a Cleveland Fed study using large household survey waves.
• Most non-owners report they don’t know what crypto returns to expect, while crypto owners forecast substantially higher returns.
• In an information experiment, showing households Bitcoin’s past 12-month return increased desired allocation and subsequent purchases.
• The study frames crypto volatility as partly driven by disagreement and learning, not only fundamentals.

Return expectations are the clearest predictor of ownership

Researchers Michael Weber, Bernardo Candia, Olivier Coibion, and Yuriy Gorodnichenko analyze repeated surveys of up to 25,000 U.S. households per wave. Their central finding is straightforward: expectations about crypto returns account for more of the differences in who owns cryptocurrency than a wide range of demographic characteristics.

In the paper, the authors highlight that the typical person outside the crypto market struggles to form a return forecast at all. In a 2021 Federal Reserve survey referenced by the authors, 87% of people who did not own crypto said they didn’t know what return to expect over the following year. Among crypto owners, the share who didn’t know was still high at 54%. The gap in knowledge is large, but the gap in forecasts that do exist is even larger.

For people willing to estimate returns, crypto ownership aligns with materially higher expectations. The study reports that crypto owners expected an average 22% return over the next year, versus 7% among non-owners. Owners also tended to judge crypto as less risky than non-owners did.

Most importantly for understanding market behavior, the authors show that these expectations are unusually powerful statistically. They find that a one-percentage-point increase in an individual’s expected crypto return is associated with a 0.8-percentage-point increase in the probability of owning cryptocurrency. When return expectations and perceived risk are considered together, they explain far more variation in ownership than observable characteristics such as age, income, and gender.

The researchers argue this makes crypto an outlier relative to other asset classes. For stocks, bonds, and gold, standard demographic and financial factors typically have more explanatory power than differences in expected returns. In crypto, the direction of explanatory power appears to flip.

Crypto participation still looks demographic—but beliefs dominate

Even with expectations taking center stage, the paper does not claim ownership is entirely divorced from who people are. The demographic pattern remains distinct after controlling for other variables. People under 40 are reported as 13 percentage points more likely to own cryptocurrency than those over 60.

Gender and household wealth also show up in the data. The study finds that men are about 4 percentage points more likely than women to own crypto, and that higher-income and wealthier households participate at higher rates. But the authors’ comparison is that these effects—distinct as they may be—are secondary to the role of beliefs about returns and risk.

This matters because it reframes a common debate. Instead of treating crypto’s unusual ownership pattern as mainly a story about who is “more risk tolerant,” the paper pushes investors to focus on what market participants think crypto will do—and how those beliefs differ from one another.

Information about recent Bitcoin returns can change behavior

The paper’s most actionable evidence comes from a randomized information experiment described by the authors. In 2025, households were randomly assigned to receive information that included Bitcoin’s previous 12-month return, alongside other choices that related to stocks and topics such as GameStop or inflation. The paper reports that participants shown Bitcoin’s recent performance increased both what they wanted to hold and what they went on to buy.

Specifically, the treatment increased desired crypto allocation by about 2 percentage points—roughly a 47% increase relative to the 4.3% desired allocation among the control group. The authors also report an increase in subsequent crypto purchases of about 2.5 percentage points.

The paper describes the result as induced demand: “providing information about recent Bitcoin returns induces some households to start buying cryptocurrency.” The effect is not uniform, however. It is concentrated among individuals who said they did not own crypto because they lacked sufficient information. Those who already believed crypto was a bad investment did not meaningfully respond to the information treatment.

In practical terms, the study suggests that crypto participation can be changed by what people are told about what happened recently—not just by long-term narratives or individual risk preferences. For traders and market observers, that implies that retail demand may be unusually sensitive to framing, past performance information, and perceived signal quality during momentum periods.

Why volatility may persist: learning, disagreement, and “past gains”

Beyond ownership and demand, the paper connects its survey and experimental findings to a broader market question: why crypto markets can produce persistent volatility. The authors describe a mechanism often discussed in behavioral finance—past positive returns can attract new participants, whose purchases can push prices higher and potentially draw still more buyers.

They present the logic explicitly, writing that “positive returns attract new participants, which raises the price further.” The authors further argue that this dynamic may be particularly relevant because crypto remains poorly understood by a large share of the population, and beliefs about future returns are therefore likely to be fragmented.

The study also examines whether crypto gains show up in household spending in a way consistent with lasting wealth effects. It reports that when a household’s entire financial portfolio was in crypto, a doubling of Bitcoin’s price increased the probability of buying a durable good by 1.4 percentage points—about a 7% increase relative to the unconditional likelihood of such a purchase. However, the effect did not persist into everyday spending.

That pattern leads the authors to a sharp interpretation: crypto gains appear to be treated more like gambling income or lottery winnings than as a stable increase in wealth. If the market consistently attracts new entrants based on recent performance, the resulting buying-and-repricing cycle could reinforce the very uncertainty and disagreement that make volatility more likely.

What to watch next

Investors will likely want to monitor whether crypto demand remains highly responsive to messages about recent performance—and how quickly beliefs converge or diverge after price moves. The Cleveland Fed paper’s central warning is that if disagreement and learning continue to shape participation, volatility may remain one of crypto’s defining features for the foreseeable future.

A new working paper from researchers at the Federal Reserve Bank of Cleveland argues that much of crypto’s unusual behavior may come down to how people form beliefs about digital assets—more than standard demographic or financial factors. In their analysis of household survey data and a randomized information experiment, the authors find that expectations about future crypto returns strongly track who owns cryptocurrency, and that learning about recent Bitcoin performance can meaningfully change both planned allocations and actual buying.

The work, titled “Do You Even Crypto, Bro? Cryptocurrencies in Household Finance”, also points to a mechanism that could help explain crypto’s persistent volatility: when prices rise, they may reinforce bullish expectations, drawing in additional buyers and further amplifying movements.

Key takeaways

• Return expectations explain crypto ownership better than demographics. The paper finds expected returns and perceived risk account for more variation in ownership than age, income, or gender.
• Many non-owners lack clear beliefs about crypto returns. In a 2021 Fed survey, most non-owners reported they did not know what return to expect over the following year.
• Information about recent Bitcoin performance changes behavior. In a 2025 randomized trial, showing households Bitcoin’s past 12-month return increased desired crypto allocations and subsequent purchases.
• Crypto gains may be treated like “gambling income,” not durable wealth. The study links BTC price increases to more durable-good spending, but not lasting increases in consumption.

Beliefs, not just backgrounds, shape who buys crypto

The researchers—Michael Weber, Bernardo Candia, Olivier Coibion, and Yuriy Gorodnichenko—use repeated survey waves covering up to 25,000 U.S. households per wave. Their central finding is that what people think crypto returns will be does a far better job of explaining ownership than observable characteristics.

According to the paper, expected returns are particularly influential: a one-percentage-point increase in an individual’s expected crypto return corresponds to a 0.8-percentage-point rise in the probability of owning cryptocurrency. When expectations about returns are combined with expectations about risk, the explanatory power rises further—surpassing the impact of factors like age, income, and gender.

This makes crypto an outlier compared with traditional asset categories such as stocks, bonds, and gold. For those markets, demographic and financial characteristics tend to matter more for ownership patterns than differences in return expectations. The paper’s implication is that crypto participation is driven less by “who you are” and more by “what you believe crypto will do.”

Large gaps in understanding may widen the volatility loop

The study also highlights how uneven knowledge and beliefs are across the population. In a 2021 Federal Reserve survey referenced by the authors, 87% of respondents who did not own crypto said they did not know what return to expect from it over the following year. Among crypto owners, the figure was still high—54% reported not knowing what return to expect.

For those who were willing to make a forecast, the study describes a substantial divergence. Crypto owners expected an average 22% return over the next year, compared with 7% among non-owners. Owners also tended to perceive crypto as less risky than non-owners did.

The authors connect this belief gap to a potentially self-reinforcing market dynamic. If rising prices strengthen optimistic expectations, those expectations can attract new participants whose buying then supports higher prices. In the paper’s words, “Positive returns attract new participants, which raises the price further.”

Notably, this mechanism does not require the underlying asset fundamentals to be the only driver of price action. Instead, it suggests that disagreement and learning—how investors update beliefs based on past outcomes—can become a major source of volatility.

Experimental evidence: showing Bitcoin’s past performance moves allocations and purchases

The paper’s most actionable part for market participants comes from a randomized information experiment. In 2025, the researchers randomly assigned households to receive information comparing Bitcoin with other topics, including stocks, GameStop, and inflation. Participants who were shown Bitcoin’s previous 12-month return increased their desired crypto portfolio allocation by roughly 2 percentage points.

The authors report this as about a 47% increase relative to a 4.3% desired allocation in the control group. They also find an increase in actual subsequent crypto purchases of about 2.5 percentage points.

Crucially, the effect was concentrated among people who said they did not own crypto because they felt they lacked sufficient information. Those who already believed crypto was a bad investment did not respond in the same way to the informational treatment.

Framed for readers, the experiment implies that retail demand may not be driven solely by price headlines or broad narratives. It may also be driven by what people are prompted to focus on—specifically, whether they are given recent performance data that reshapes expectations about future returns.

What happens to consumption when crypto wealth rises?

Beyond trading behavior, the paper examines whether crypto gains translate into broader spending patterns. The authors report a spillover effect from crypto price changes into household consumption, particularly for durable goods. When BTC doubled in price, a household whose entire financial portfolio was in crypto became 1.4 percentage points more likely to buy a durable good.

They describe this as roughly a 7% increase relative to the unconditional probability of such a purchase. However, the effect did not persist into ordinary spending, and the pattern leads to a sharper interpretation: crypto gains appear to function more like “gambling income” or lottery winnings than as a steady, confidence-building increase in long-term wealth.

That distinction matters because it suggests crypto’s influence may be episodic. Even if price surges provide short-term boosts to certain spending categories, they may not reshape households’ longer-term financial behavior in the same way as more stable forms of wealth.

For investors and builders, the study’s core warning is uncomfortable but practical: if participation is belief-driven and information-sensitive, volatility may remain structurally high. Readers should watch next for how new retail entrants interpret Bitcoin’s recent performance, and whether changes in public messaging or access to return information amplify the feedback loop the paper describes.

A new Federal Reserve Bank of Cleveland working paper offers a provocative explanation for why cryptocurrency behaves so differently from traditional financial assets: Americans who buy crypto don’t simply have different demographics or risk appetites, they have radically different beliefs about digital assets’ future returns.

The finding could help explain both crypto’s persistent volatility and the way rallies can attract new buyers, potentially creating a feedback loop in which rising prices reinforce bullish expectations and pull more investors into the market.

Using repeated surveys of as many as 25,000 US households per wave, researchers Michael Weber, Bernardo Candia, Olivier Coibion and Yuriy Gorodnichenko found that expectations about crypto returns explain more of the variation in who owns cryptocurrency than a broad range of demographic characteristics. 

The paper, titled “Do You Even Crypto, Bro? Cryptocurrencies in Household Finance,” also uses a randomized information experiment to show that simply giving people information about Bitcoin’s (BTC) recent performance can increase both their desired crypto allocation and their subsequent purchases. 

Perceived risk of crypto by ownership. Source: Federal Reserve Bank of Cleveland

The researchers say the results point to a potential mechanism behind speculative bubbles: past gains can attract new investors, whose purchases push prices higher and potentially attract still more buyers. 

“Positive returns attract new participants, which raises the price further,” the authors write

That dynamic is particularly striking because cryptocurrency remains poorly understood by a large share of the population. In the researchers’ 2021 survey, 87% of people who did not own crypto said they didn’t know what return to expect from it over the following year. Among crypto owners, the figure was still 54%. 

Related: Canadian crypto ownership increases to 25%: Ontario survey

Ownership linked to double-digit returns expectations

For those willing to make a forecast, however, the gap was enormous. Crypto owners expected an average 22% return over the following year, compared with just 7% among non-owners. Owners also tended to view crypto as less risky than non-owners did. 

The researchers found that expected returns were unusually powerful in determining ownership. A one-percentage-point increase in an individual’s expected crypto return was associated with a 0.8-percentage-point increase in the probability of owning cryptocurrency. Expectations about returns and risk together explained considerably more variation in crypto ownership than observable characteristics such as age, income and gender. 

That makes crypto an outlier compared with stocks, bonds and gold. For traditional assets, demographic and financial characteristics generally have much more explanatory power than differences in expected returns. Crypto reverses that relationship. 

Source: Federal Reserve Bank of Cleveland

The demographic profile of crypto investors nevertheless remains distinctive. People under 40 were 13 percentage points more likely to own cryptocurrency than those over 60, even after controlling for other characteristics. Men were about 4 percentage points more likely than women to own crypto, while higher-income and wealthier households were also more likely to participate. 

The experiment provides perhaps the paper’s most consequential finding for crypto markets.

In 2025, researchers randomly assigned households to receive information about BTC, stocks, GameStop or inflation. Participants who were shown Bitcoin’s previous 12-month return increased their desired crypto portfolio allocation by roughly 2 percentage points, or about a 47% increase relative to the 4.3% desired allocation among the control group. Actual subsequent crypto purchases also rose by about 2.5 percentage points. 

The authors describe the result as “providing information about recent Bitcoin returns induces some households to start buying cryptocurrency.” 

The effect was concentrated among people who said they didn’t own crypto because they lacked sufficient information. Those who already believed crypto was a bad investment generally did not respond to the information treatment. 

The paper also finds that crypto wealth can spill into household consumption. A doubling in BTC’s price made a household whose entire financial portfolio was in crypto 1.4 percentage points more likely to buy a durable good, equivalent to roughly a 7% increase relative to the unconditional probability of such a purchase. But the effect did not persist into ordinary spending. 

That led the researchers to a stark comparison: crypto gains appear to be treated more like “gambling income” or lottery winnings than a permanent increase in wealth.

The broader implication is that crypto’s volatility may be rooted partly in disagreement and learning rather than simply market fundamentals. The authors conclude that cryptocurrency stands out because it is poorly understood, investors form sharply different views about its prospects, and new information about past returns can change both expectations and behavior.

“The absence of common information and beliefs about crypto across investors,” they write, “suggests that price volatility will continue to be one of the most defining characteristics of this new asset for the foreseeable future.” 

For crypto markets, that suggests a potentially uncomfortable conclusion: the next wave of retail demand may depend not only on Bitcoin’s price, but on what investors are told about the price that came before it.

Magazine: The 100x obsession: Fundamentals grow in importance as crypto matures

BitMart said on Aug. 21 that it was exploring a restructuring plan involving creditor distributions and the phased restart of selected operations, less than four weeks after announcing a complete wind-down.

The exchange appointed White & Case as restructuring counsel. It promised another update by Sept. 9 but did not cancel its existing Aug. 26 trading cutoff or Jan. 31, 2027, closure date.

The announcement marks BitMart’s first public reference to creditors. It does not explain which customers or counterparties fall within that category.

BitMart restart remains under assessment

BitMart said the proposed plan could combine an orderly resumption of certain services with distributions to creditors. Any restart remains subject to legal, financial, operational and regulatory reviews.

“The potential plan may include the phased resumption of certain operations,” BitMart said. The company has not approved or launched that plan.

White & Case will evaluate available options with BitMart’s other advisers. The law firm’s appointment does not establish that BitMart has entered bankruptcy or another court-supervised process.

No verified bankruptcy petition, restructuring case number or creditor-claim portal had been published when this report was prepared. BitMart also has not identified the legal entity or jurisdiction that would administer distributions.

The exchange said it expects to consult its community after a business resumption plan launches. It has not explained how customers would participate or whether any creditor vote would be required.

August 26 trading deadline remains active

BitMart’s closure notice still schedules all spot, futures and other trading to end at 01:00 UTC on Aug. 26.

Futures accounts have entered reduce-only mode, while spot markets stopped accepting new orders. New registrations and cryptocurrency and fiat deposits began closing on July 26.

Any futures positions remaining at the deadline may be settled using the applicable mark price, index price or platform settlement rules. BitMart said it would publish separate settlement arrangements, but the restructuring update did not provide them.

The exchange previously recommended completing verification and submitting withdrawal requests before 05:00 UTC on Aug. 26. Withdrawals officially remain available, although additional identity, sanctions, transaction-history and wallet checks may delay processing.

As crypto.news reported, the shutdown announcement sent BMX down more than 60% within the surrounding 24-hour period. The possible restructuring does not currently change the withdrawal guidance.

Creditor language raises unanswered questions

BitMart did not disclose why customer or counterparty balances may require creditor distributions rather than ordinary withdrawals. Its July notice cited operating conditions, the market environment and future strategy without describing a shortfall.

The latest statement includes no balance sheet, liability total, reserve report or recovery percentage. It also does not establish whether user assets and unsecured commercial claims would receive different treatment.

Earlier concerns about BitMart’s reserves and custody position were based partly on third-party wallet tracking and customer reports. Those observations do not independently establish the exchange’s complete assets or liabilities.

Onchain balances cover only publicly identified wallets. They cannot show undisclosed addresses, fiat holdings, offchain liabilities or assets held through custodians. A reliable recovery assessment therefore requires audited financial information or verified court disclosures.

September roadmap must clarify payouts

BitMart said it would “endeavour” to provide another update no later than Sept. 9. The wording commits the exchange to further communication rather than a finalized restructuring agreement.

The next announcement needs to identify which operations could restart, which legal entities owe creditors and how claims will be valued. Customers also need information about payout timing, available assets and the treatment of pending withdrawals.

Unless BitMart formally changes its schedule, trading will stop two weeks before the restructuring update. The wider platform remains scheduled to terminate at 15:59 UTC on Jan. 31, 2027.

BMX was trading near $0.061 on Aug. 23, according to CoinGecko. The token remained approximately 80% below its price one month earlier despite recovering modestly over the preceding week.

The Sept. 9 update will determine whether BitMart has a viable restart proposal or continues with its original wind-down. Until then, the phased restart and creditor distributions remain possible components rather than confirmed outcomes.