Investors expecting higher crypto returns are far more likely to own digital assets, outweighing factors like age or income, per research.
A Federal Reserve Bank of Cleveland study found that expected returns strongly influence cryptocurrency ownership. A 1-percentage-point increase in expected returns correlates with a 0.8-percentage-point rise in ownership probability, outpacing demographic factors like age or income.
Crypto owners anticipated an average 22% return over the next year, compared to 7% for non-owners. Owners also perceived crypto as less risky. The study noted that 87% of non-owners lacked clarity on expected returns, highlighting a knowledge gap driving speculative behavior.
The findings suggest past gains attract new investors, fueling price surges and potential bubbles. This dynamic contrasts with traditional assets like stocks, where ownership patterns align more closely with observable traits.