A Federal Reserve Bank of Cleveland experiment provides evidence that Bitcoin price gains can encourage new investors to enter the crypto market.

Researchers randomly exposed participants in a 2025 survey to information about

  • Bitcoin,

  • the S&P 500,

  • GameStop or

  • the Fed’s inflation outlook.

 

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Those shown that Bitcoin had gained 14.3% over the previous 12 months were about 2.4 percentage points more likely to report owning crypto in a follow-up survey – a roughly 23% increase from the 11% ownership rate before the experiment.

The effect was similar for participants shown a Bitcoin price chart.

The study also found that exposure to Bitcoin’s gains increased respondents’ desired crypto allocation by about 2 percentage points, from an average of 4.3% in the control group. Much of that allocation came at the expense of cash and bank deposits.

Expectations also shifted. Those shown Bitcoin’s positive performance raised their expected crypto returns over the following year by 3.2 percentage points while the price-chart treatment increased expectations by 1.2 points.

The effect was strongest among respondents who said they avoided crypto because they lacked sufficient knowledge about it.

 

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The researchers said the findings point to a potential feedback loop in speculative markets: rising prices attract new participants, which can generate further demand and push prices higher.

 

“Positive returns attract new participants, which raises the price further,” the authors wrote, adding that investors appeared more likely to extrapolate past gains than expect prices to revert toward their historical mean.

 

The study covered 5,352 respondents across Q2 through Q4 of 2025 and measured self-reported crypto ownership rather than actual transaction data.

The finding offers a data-backed explanation for why strong Bitcoin rallies can become self-reinforcing while also highlighting the risk that rising expectations, rather than fundamentals, can help fuel speculative bubbles.

 

 

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