It’s no surprise that the average South African crypto buyer is male. Data like an average R450 first-time spend and an eight-month holding period show that cryptocurrency is a popular investment. This is because of global events.
“South Africa is one of our strongest markets, in fact, South Africans make up about 43 percent of our verified customers,” says Richard Ball, lead data scientist at Luno. “Over the past year, we verified more than three million new users worldwide. We are expanding into new countries and the trend is changing. ”
Malaysia now makes up almost 14% of Luno’s customer base, up 8% year-on-year.
South African customer behavior
“Most customers start with a relatively small deposit, while the top 25 percent of our biggest local customers start to buy crypto at around R1 500 and the highest deposit amount among our smallest 25 percent of customers is only around R90.”
Ball believes these metrics are good news to Luno as they demonstrate that South Africans have a responsible approach to crypto investments. Luno lets customers buy crypto starting at R1. This is in keeping with the company’s mission to provide greater access to crypto and encourage people to make smaller deposits to learn more about it.
South Africans start their first deposits with an average of R450. This has increased since the November 2021 BTC dip
South Africans’ most popular crypto coins
“The greatest increase so far this year in demand is XRP, with a 25 percent price surge within a single week. USDC, a cryptocurrency linked to the US dollar, is the least popular on Luno’s platform, in line with its status as a stable coin.”
Ball states that customers purchased USDC in the last few months during the market decline. “When crypto prices fall, some customers buy into USDC to shield themselves from further market volatility. After volatility has subsided, traders will usually move from USDC to crypto like BTC once the market is stable again. In some sense, this is in line with traditional financial markets where investors avoid risk and move to cash during periods of uncertainty.”
Bitcoin, Ethereum, XRP and Ethereum are the most widely used crypto coins in SA. 80% of customers prefer to buy than sell these coins.
Who are South African cryptocurrency buyers?
The local buyers almost mirror the global picture. As is the case with traditional financial services, crypto is more popular among men than it is for women in South Africa.
South African customers have held their crypto for an average eight month, which is longer than the two-year mark. With the exception of traders, who naturally would be more active, Ball states. “Overall, this indicates that South African customers increasingly view crypto as a longer-term investment and are not necessarily buying it to make a quick buck.”
About 30% of 18–29-year-old Luno customers are women, rising to a high of 46% in the 60+ age bracket
Customers buy when their behavior is reflected in their behaviour.
“We frequently perform cohort analysis to track the transactional behaviour of customers who first bought at a particular point in time,” Ball explains. “They are grouped into a cohort, for example, the 2017 or 2018 cohort.”
“Customers who bought during the peaks in 2017 or 2021 tend to display different holding period behaviour compared to customers who bought when the price action was much flatter.”
Customers who purchased their first purchase when the price was rising might be more speculative
Greater use of Luno’s savings wallets
“There has been a 15 percent increase in local customers using the savings wallet over the past three months,” he says.
“The interest earned on crypto holdings via savings wallets is paid monthly. Customers of Luno can earn interest up to 7.6 percent by opening a Luno savings account. Since South Africans are holding on to their crypto coins for longer, it makes sense to earn interest until they are ready to sell.”
About 7% Luno customers make use of the savings wallet every month.
Customers who return repeatedly
Ball claims that more than 1o% of active Luno customers used the repeat-buy function within the last three months. South Africans have purchased an average R400 worth of cryptocurrency using this facility, on average, in South Africa.
Repeat buy is an instruction that customers buy into the market at regular intervals. It is a great way to purchase crypto without needing to time it. You must be very attentive to market movements to make sure you don’t buy when it falls and you sell when it goes up.