According to the 2023 digital global overview report by Meltwater, Kenyan retail investors held an average of Sh2,076 ($16.08) worth of cryptocurrencies last year, placing them at the bottom of the list of countries surveyed in terms of allocation to alternative assets.
In fact, Kenya was ranked 39 out of 40 countries on the list of average annual spending on cryptocurrency per user.
In contrast, Switzerland retail investors led the way in digital currency purchases, spending an average of $960.7 last year, while Nigeria came in last at $14.76.
The most commonly purchased cryptocurrencies included Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Binance Coin (BNB), and US Dollar Coin (USDC).
The report stated that the average total value of crypto purchases in 2022 per retail trader who bought any form of crypto in Kenya was $16.08 in US dollar equivalent.
According to the United Nations Conference on Trade and Development (UNCTAD), over 4.25 million individuals in Kenya possess cryptocurrency, accounting for 8.5 percent of the country’s total population.
This places Kenya at a high standing in terms of involvement in the digital currency market, but a low ranking when it comes to the amount of money invested in this field.
Kenya ranks ahead of developed nations, including the United States, which is sixth on the list with 8.3 percent of its population owning digital currencies.
UNCTAD attributes Kenya’s growing adoption of digital currencies to the low fees charged by crypto exchanges, the speed of remittance transfers, and widespread internet access.
The Meltwater report reveals that roughly 12.4 percent of Kenyans aged 16 to 64 own some form of cryptocurrency, with the majority of traders being male.
The cryptocurrency market is notorious for its unpredictable fluctuations in value.
In fact, it has lost more than fifty percent of its value since November of last year due to investors withdrawing funds from riskier assets amidst concerns about rising inflation and interest rates.
Investors utilize cryptocurrencies as a means of investment, to safeguard their savings, or to conduct cross-border remittances.
Cryptocurrencies are becoming more widely accepted as a payment method for goods and services due to their convenience and speed. This is particularly appealing to individuals who wish to remain anonymous.
Recently, the Central Bank of Kenya requested feedback from the public regarding the potential implementation of a digital currency, known as the Central Bank Digital Currency (CBDC).
The CBDC has the potential to reduce costs associated with cross-border transactions.
The Senate has now taken steps towards the development of a framework for the operation of the CBDC in Kenya.
However, the rise in cryptocurrency crashes has caught many traders off-guard, particularly since the Russian invasion of Ukraine.
According to Meltwater, those who trade in Bitcoin have experienced significant losses.
The once “hot” trends of NFTs and cryptocurrencies have also become less appealing due to economic challenges and scandals, resulting in a decrease in growth.
NFTs are essentially digital assets representing collectibles such as music, art, or games.