Federal Reserve Bank of Cleveland study links Bitcoin returns to crypto buying

A working paper from the Federal Reserve Bank of Cleveland indicates that historical Bitcoin returns significantly influence the investment intentions and behaviors of U.S. households. According to the study, providing participants with information regarding Bitcoin’s trailing 12-month returns led to a roughly two percentage point increase in desired cryptocurrency allocations and a 2.5 percentage point increase in actual subsequent purchases.

The research highlights a notable gap in expectations between current cryptocurrency owners and non-owners. Owners expected average annual returns of 22%, while non-owners expected only 7%. Additionally, the study found that crypto holders tend to perceive digital assets as safer than non-holders do.

Beyond investment behavior, the researchers identified a correlation between Bitcoin price fluctuations and real-world consumer spending. Specifically, increases in Bitcoin prices were linked to higher spending on durable goods, such as appliances, cars, and furniture, among existing cryptocurrency holders.