A recent study by the Federal Reserve Bank of Cleveland has provided fresh evidence that Bitcoin's past performance, including a 14% annual gain, serves as a powerful magnet for new investors, reinforcing the idea that prior returns drive market expansion.
Conducted in 2025, the survey divided 5,352 participants randomly into a control group and six experimental groups, each receiving different types of information regarding Bitcoin, the S&P 500, GameStop (GME.US) stock, or Federal Reserve inflation projections. One group was informed of Bitcoin's returns over the preceding 12 months, while another was shown a price trend chart.
The findings revealed that those who received return information saw their likelihood of holding cryptocurrency increase by 2.41 percentage points, while the group viewing the chart experienced a 2.48 percentage point rise. Given the baseline ownership rate of just 11%, these increases represent a roughly 23% boost relative to the initial level.
The analysis, spanning the second through fourth quarters of 2025, relies on self-reported data and controls for prior holding status. Data compiled by Woofun AI indicates that the informational intervention lifted respondents' expected cryptocurrency allocation in their portfolios by about 2 percentage points from the control group's average of 4.3%. Notably, the additional funds were sourced primarily from cash, checking, and savings accounts, while also leading to increased stock holdings.
After learning about Bitcoin's performance, respondents raised their one-year-ahead return expectations by 3.2 percentage points, with the chart group showing a 1.2 percentage point increase. The effect was most pronounced among those who had previously avoided crypto assets due to a lack of understanding, whereas it was statistically insignificant for those who viewed Bitcoin as a poor investment option.
Interestingly, an S&P 500 chart also boosted holding intentions, but stock return information did not alter portfolio allocation structures. The study highlights how positive returns attract new investors and push prices higher, as individuals do not anticipate a price correction but instead extrapolate past gains into the future. This mechanism illuminates the formation of speculative bubbles: rising returns strengthen future expectations, draw in new buyers, and in turn, fuel further price appreciation.
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