A new study shows crypto holders form unusually optimistic beliefs that set them apart from investors in stocks, bonds or gold.
The Cleveland Fed says cryptocurrency ownership among US households rose from about 3% in 2021 to 11-12% later, fluctuating with Bitcoin prices.
Holders tend to be young, male, higher-income and libertarian or politically independent.
“Crypto holders expect much higher rates of return for crypto and perceive it as relatively safer than non-holders do.”
They expect returns around 22% annually versus 7% for non-holders.
“information about historical returns of cryptocurrencies in an information provision experiment embedded in the survey leads individuals to increase their desired crypto holdings and increases their actual cryptocurrency purchases subsequently.”
Bitcoin price shifts also affect crypto holders’ spending on durable goods in proportion to their crypto wealth share, with about 20% of holders reporting crypto makes up at least half their finances.
Most use it as an investment rather than for transactions, echoing earlier Federal Reserve findings that cryptocurrency use as an investment was far more common than use for transactions or purchases.
These patterns make crypto unique in household finance due to heterogeneous expectations and responsiveness to return data.
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