Fed Study: Crypto Buyers Chase Past Gains, Not Facts

A new study from the Federal Reserve (the central bank of the United States, which manages the country's money) reveals something surprising about crypto investors: many buy based on gut feelings and recent price gains rather than solid understanding.

The research shows that when people see cryptocurrency prices going up, they rush to buy — which pushes prices even higher and attracts more buyers. Researchers say this is exactly how a speculative bubble (when prices rise far above real value simply because people expect them to keep rising) can form.

Even more striking, most people admit they don't really know what they're doing:

• 87% of people who don't own crypto said they had no idea what return (profit) to expect from it over the next year.
• 54% of people who DO own crypto also couldn't guess their expected return.
• Crypto owners expected a 22% return, while non-owners expected just 7%.

Beliefs matter more than facts. For traditional investments like stocks (small ownership shares of companies) and bonds (loans to governments or companies that pay interest), things like age and income predict who invests. With crypto, it's the opposite — personal expectations about profit matter far more.

The study also ran an experiment in 2025. When people were simply shown Bitcoin's price gains from the past year, they wanted to invest 47% more in crypto. This effect was strongest among people who previously felt they "lacked information."

Interestingly, the researchers found people treat crypto profits like "gambling income" or lottery winnings — spending a little on big one-time purchases but not treating it as lasting wealth.

The bottom line: Because crypto is poorly understood and people hold wildly different opinions about it, the Fed expects prices to stay highly volatile (jumping up and down sharply) for a long time. The next wave of buyers may depend less on Bitcoin's actual value and more on what stories they're told about its past performance.

This is an AI-generated summary. Read the original article at: https://cointelegraph.com/news/fed-study-finds-crypto-investors-driven-by-beliefs-easily-swayed-by-returns?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound