SA’s crypto investors are overwhelmingly male, Luno data shows

SA crypto investors tend to be men who spend about R450 on their first purchase and hold on to their digital investment for about eight months on average before selling.

That’s according to a data analysis by Luno, the London-based crypto platform founded by four South Africans that now has about 10-million customers in more than 40 countries. Luno is also the largest crypto platform in SA with 3.06-million customers, of whom 2.2-million have been “know your customer” (KYC) verified to reveal that 63% are male and only 37% female. Nigeria is Luno’s next biggest market in Africa with 2.86-million customers followed by Uganda (62,000), Zambia (43,000) and Zimbabwe (24,000).

Interestingly, the gender disparity in the SA crypto landscape tends to improve as one moves up in age groups, with investors over the age of 50 being 46% female compared with only 31% in the 18-24 bracket and 33% for those aged 25-29. Though that may be a consequence of women with more career experience having more wealth, Luno says the gender disparity may simply be mirroring that of traditional financial services.

“Most customers start with a relatively small deposit, while the top 25% of our biggest local customers start to buy crypto at around R1,500,” says Richard Ball, lead data scientist at Luno. “The highest deposit amount among our smallest 25% of customers is only around R90.”

Crypto investing has exploded in recent years with the Covid-19 pandemic further accelerating a general shift towards do-it-yourself online investing, which has served as a further boon for digital assets. Nevertheless, digital assets are characterised by extreme volatility with bitcoin, the crypto currency with the biggest market capitalisation, plunging from more than $64,000 as recently as November to $38,872 today.

Ball says bitcoin remains the most popular crypto asset in SA followed by Ethereum and XRP, with the three digital currencies accounting for 94% of its trading volumes. He also says that 80% of the transactions recorded on Luno stem from people who are buying rather than selling — an indication of the general bullishness shown towards crypto assets.

“The greatest increase so far this year in demand is XRP,” says Ball. “USDC, a cryptocurrency linked to the dollar, is the least popular on Luno’s platform, in line with its status as a stable coin.”

In some sense, Ball says USDC appears to be viewed as a cash-like proxy to crypto investors, given that it is underpinned by the dollar, which is still the global reserve currency. That’s reflected by investor behaviour, which typically sees crypto buyers switch into USDC when the asset class experiences a price dip, only to move back into more volatile crypto assets such as bitcoin when upward price momentum returns.

“This is in line with traditional financial markets, where investors avoid risk and move to cash during periods of uncertainty,” says Ball.

While crypto investors are often derided in traditional financial services circles as being akin to gamblers, Luno’s data suggests the situation is not quite as clear cut. Ball says SA crypto investors fall into different cohorts, with buyers who began dabbling in the asset class during the bull runs of 2017 and 2021 tending to exhibit more speculative behaviour, while those who bought outside of those periods act more like longer-term investors.

Crypto enthusiasts can now also earn interest on their holdings with Luno offering as much as 7.6% per annum with interest paid monthly to customers who open a savings wallet account. While only about 7% of Luno’s customers use its savings wallet offering the number of customers making use of the facility has surged 15% in the last three months.

Luno’s data also shows that SA customers are increasingly buying crypto assets at regular monthly intervals, much like they would if they were investing in a unit trust via monthly debit order. That suggests the asset class is increasingly being viewed by retail investors as a legitimate investment vehicle rather than a  speculative punt.

The platform’s data shows that SA crypto investors buy an average of R400 in crypto currency each month using its “repeat buy” function, an automated order to purchase a selected tranche of crypto currencies on a set date for a specific amount that is subtracted from a client’s cash balance. Provided the client’s Luno account has sufficient cash reserves at the time of the repeat buy order, the transaction will be processed much like a debit order (though the functionality is not strictly speaking a debit order subtracted from a client's bank account).

“We would infer that customers who use the repeat buy functionality regularly can be considered longer-term investors and not speculators,” Ball said.

theunisseng@businesslive.co.za