How South Africa’s ‘Quiet-Storm’ Crypto Market Is Shaping Up

The average South African crypto buyer is most likely to be male, spends about ZAR 450.00 (~USD 30.00) on the first purchase and holds onto it for about eight months, according to data from Luno, a prominent crypto platform in the country boasting 9.8 million customers across 40 countries.

Interest in crypto is rising on the African continent, says Richard Ball, lead data scientist at Luno. “South Africa is one of our strongest markets, in fact, South Africans make up about 43 percent of our verified customers. Over the past year, we verified more than 3 million new users worldwide. As we expand into new territories, the trend is starting to shift. ”

Ball says the greatest surge of interest was in Malaysia, which now makes up almost 14 percent of Luno’s customer base, an increase of 8 percent compared to a year ago. 

South African customer behaviour 

South Africans usually start with an average first deposit of ZAR 450.00 (~USD 30.00), an increase since the dip in Bitcoin in November last year, Ball says. 

“Most customers start with a relatively small deposit, while the top 25 percent of our biggest local customers start to buy crypto at around ZAR 1.5 K (~USD 100.00) and the highest deposit amount among our smallest 25 percent of customers is only around ZAR 90.00 (~USD 6.00).” 

Ball says these metrics are good news for Luno, as they indicate that South Africans are investing in crypto responsibly. Luno allows customers to buy crypto for as little as ZAR 1.00 (less than a cent) in line with its mission to ensure wider access and encourages people to start with smaller deposits while they learn more about crypto. 

South Africans’ most popular cryptocoins

According to Ball, the most popular cryptocoins in South Africa are Bitcoin, Ethereum and XRP, with more customers buying than selling. Almost 80 percent of the transactions on Luno are from people buying crypto, which provides a rough indication of how bullish customers are on the top three 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 stablecoin.”

Ball says customers bought USDC during the market dip in the past few months. “When crypto prices fall, some customers buy into USDC to shield themselves from further market volatility. Once volatility has cooled down, traders will typically move from USDC back into crypto such as BTC. In some sense, this is in line with traditional financial markets where investors avoid risk and move to cash during periods of uncertainty.”

Who are South African crypto buyers? 

The local buyers are almost a mirror image of the global picture. In line with the gender split in traditional financial services, more men are buying crypto in South Africa than women, with about 30 percent of the activity in the 18–29-year age bracket from women. However, in the 60+ age bracket, a greater percentage of women – about 46 percent – are active on Luno.

South African customers hold their crypto for an average of 8 months, which is much longer than two years ago, with the exception of traders, who would naturally be more active, Ball says. “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.”

Behaviour depends on when customers bought

Ball says Luno is noticing that customer behaviour varies depending on when customers first bought crypto. “We frequently perform cohort analysis to track the transactional behaviour of customers who first bought at a particular point in time. 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.”

Ball explains that customers who first bought when the price was surging, might be more speculative, while customers who buy when the markets are flat, tend to be longer-term investors. 

Repeat buying

According to Ball, more than 1 in 10 active Luno customers have used the repeat buy function in the past three months, with South Africans buying an average of ZAR 400.00 (~USD 26.00) worth of cryptocurrency per month using this facility. Repeat buy is an instruction to buy into the market at regular intervals and is a great way for customers to buy crypto without having to time the market. Without a repeat buy instruction, one needs to keep a very close eye on movements in the market to ensure they buy when the price dips and sell when it rises. 

Featured Image Courtesy: Sygna