A new study by the Federal Reserve Bank of Cleveland found that information about Bitcoin's past performance can increase investors' desire to enter the cryptocurrency market. According to the study, participants who were provided with information about Bitcoin's recent returns were much more likely to purchase cryptocurrency in the future.
According to Coindesk, the report, prepared by Federal Reserve Bank of Cleveland economists Michael Weber, Bernardo Candia, Olivier Coibion, and Yuriy Gorodnichenko, examined US household investments in cryptocurrencies and the factors influencing these investment decisions.
This study showed that participants who received information about Bitcoin's price growth were more likely to own BTC and other cryptocurrencies.
The published report indicated that some participants were provided with information on Bitcoin's performance over the past 12 months, while another group was not given such information.
"...Thus, the goal was to measure the impact of knowledge about Bitcoin's past returns on investment behavior."
Trend of Buying Cryptocurrency Strengthened!
The report states that as a result of the study, participants who were told that Bitcoin's return over the previous 12 months was 14.3% were approximately 2.41 percentage points more likely to report owning cryptocurrency in a subsequent survey.
In the group shown a Bitcoin price chart, this increase was approximately 2.48 percentage points.
"Given that initially about 11% of participants owned cryptocurrency, this increase corresponds to a relative increase of approximately 23% compared to the current ownership level."
Share of Investors Willing to Invest in Cryptocurrency Also Increased!
The research affected not only existing cryptocurrency ownership but also the percentage of cryptocurrencies investors were willing to allocate to their portfolios.
Participants who received information about Bitcoin's past performance increased the share of cryptocurrencies in their investment portfolio by approximately 2 percentage points. A significant portion of this increase appears to be explained by a shift from cash and bank accounts to crypto assets.
One of the important findings of the study was that knowledge of Bitcoin's past performance had a stronger influence on those who were less informed about cryptocurrencies.
The economists added that the latest research shows that Bitcoin and the market can attract new investors who previously did not follow or own cryptocurrencies.
*This is not investment advice.
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