Bitcoin Rally Attracts New Buyers: Cleveland Fed Study Points to Bubble Risk
An experiment conducted by the Cleveland Fed revealed that individuals who see Bitcoin’s gains over the last 12 months are more inclined to own cryptocurrency and allocate more space to crypto in their investments.
The Cleveland Fed working paper, reported by CoinDesk, examined the results of a survey conducted with 5,352 participants between the second and fourth quarters of 2025. Participants were randomly divided into six groups: a control group that received no additional information, and groups presented with information regarding Bitcoin, the S&P 500, GameStop, or the Fed’s inflation forecast. One of the Bitcoin groups was told it had gained 14 percent in the last 12 months, while the other was shown a price chart.
Among those who learned of Bitcoin’s returns, the rate of reporting crypto ownership in the subsequent survey increased by 2.41 points. For those who saw the price chart, this increase reached 2.48 points. Prior to the experiment, approximately 11 percent of participants owned crypto. This result represented a relative increase of about 23 percent compared to the initial rate. The research measured self-reports rather than actual trading records.
Bitcoin rally attracts new investors
Participants provided with information about Bitcoin increased the share they wanted to allocate to crypto by approximately 2 points compared to the 4.3 percent average in the control group. A significant portion of this increase was covered by cash, checking accounts, and savings accounts. The share planned for allocation to stocks also rose.
Those who learned of Bitcoin’s past performance expected crypto returns to be 3.2 points higher over the next 12 months. The price chart increased this expectation by 1.2 points. The strongest reaction was observed in individuals who stayed away because they did not have enough information about crypto. No significant change occurred among those who considered crypto a poor investment.
The S&P 500 performance chart also increased subsequent crypto ownership, but information regarding stock returns did not change the portfolio allocation plan. The authors stated that carrying high past returns into the future, rather than seeing them return to normal, could attract new buyers and push prices even higher. This cycle could increase the risk of a speculative bubble. However, the self-reported results do not show that participants actually made purchases.