The Federal Reserve Bank of Cleveland conducted a study from 2018 to 2025 with thousands of American households on their cryptocurrency investment decisions. Crypto holders expected an average return of 22% over 12 months versus 7% for non-holders in 2021, with the gap persisting in 2025 at 13.8% versus 4.7%. An experiment conducted in Q2 2025 showed that informing participants of Bitcoin’s 14.3% gain raised their return expectations by 3.2 percentage points and their desired crypto allocation by approximately 2 percentage points. The probability of reporting cryptocurrency ownership increased from 2.41 to 2.48 percentage points, representing a relative rise of about 23%. The study suggests that investors readily extrapolate past performance when forming return expectations, a mechanism that may contribute to fueling bubbles.
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