Indonesia Has the 5th Highest Number of Degen Crypto Investors
Indonesia has become the country with the fifth-highest number of degenerate cryptocurrency investors. Degenerate investors are those who invest in high-risk, speculative crypto opportunities, albeit for relatively small investments.
The country ranks behind the U.S., the UK, the Philippines, and France respectively, and has nearly 4% of all degenerate investments. The news comes as the country’s Financial Services Authority (OJK) continues to expand its crypto finance education to ensure investors know what they are investing in and the risks associated with cryptocurrency investment.
Indonesian Crypto Trading
Indonesia has one of the highest crypto adoption rates in the world, partially due to the fact the country has approximately 100 million unbanked citizens. Cryptocurrency’s decentralized nature means that crypto wallets available in Indonesia offer access to some banking and financial services that are not otherwise available to its users.
According to crypto expert Michael Graw, a cryptocurrency wallet offers users total control over their crypto holdings while offering enhanced security compared to other means of storing currencies.
Degenerate Investors
While the number of businesses accepting cryptocurrency continues to increase, the likes of Bitcoin and Ether are still seen primarily as a form of investment. This is driven by high levels of volatility in the market, which can enable investors to generate a lot of profit, although it also means the risks are higher than in traditional forms of investment like stocks and shares or foreign exchange.
While the largest cryptos do suffer volatility, it is even more magnified in the meme coin market and in smaller coins. Many speculative investors go looking for the next presale or ICO that will post 1,000% returns. These returns are rare, but they do happen, and it doesn’t take a lot of investment to enjoy big gains.
Degenerate investors are those who buy into these speculative, high-risk crypto projects. They typically only invest small amounts, but they will invest in multiple projects in the hope of hitting the jackpot. There are concerns from many financial experts, governments, and regulators, that investors don’t understand the full risks associated with these investments and they have been described as being akin to gambling.
According to a CoinGecko report, Indonesia has found itself in the list of the top five countries with degenerate crypto investors. 3.96% of the world’s speculative cryptocurrency transactions are made in Indonesia. The U.S. has the largest share, with 16.83%, followed by the UK with 6.16%, the Philippines at 5.07%, and France at 4.4%.
The Risks
Speculative investment in cryptocurrency does carry considerable risks, as well as big potential gains.
Pump and dump schemes are most commonly experienced in meme coins. Meme coins are based on Internet jokes and memes and have no intrinsic value. As such, they are driven purely by sentiment and community backing. In some cases, these coins are launched by groups of investors. They buy the coins, causing the price to start to increase, therefore encouraging unsuspecting investors to do the same.
When this influx of investment causes the price to spike, the original group sells its coins, and the price tumbles below its early price. Not only do the coins lose value, but the action is seen by the market and it becomes virtually impossible to find buyers, leaving speculative investors holding worthless cryptocurrency pots.
Some coins fail because they don’t have the right infrastructure, marketing, or network in place. These might not be deliberate pump-and-dump schemes but their effects and be just as devastating.
Even those coins with solid backing that will eventually go on to perform well can suffer significant price drops in their early days, especially when they are listed on exchanges.
The Indonesian Crypto Market
Indonesia has one of the world’s largest cryptocurrency markets, especially in terms of its adoption rate within the country. Indonesia’s population ranks third of all countries in the world for crypto adoption and first in the Southeast Asia and Oceania region. Approximately 28.5 million of the country’s population of 277 million has adopted or used cryptocurrency. This adoption rate is thanks largely to a young population, a high rate of smartphone and tech ownership, and the country’s regulatory approach to crypto.
Developing Banking System
Indonesia has one of the world’s largest populations of unbanked citizens with nearly 100 million people not having access to basic banking features. Whilst it can be difficult to spend cryptocurrency, especially on essentials like rent and utilities, crypto offers peer-to-peer payments and there is a growing number of businesses that do accept the likes of Bitcoin as a payment method. It is certainly better than not having any financial facilities whatsoever.
A Young Population
More than half of Indonesia’s population is aged between 18 and 39, which is the target market for the cryptocurrency industry. This demographic is also the most likely group to buy smartphones and own devices that can be used to trade cryptocurrency, and younger generations are more likely to be exposed to information about cryptocurrency on social media and other platforms.
Smartphone penetration in the country stands at more than 90%, thanks to the government’s mobile-first strategy. Many exchanges offer advanced apps that can be used to analyze prices as well as initiate and complete trades.
Speculative Investment
While more businesses accept cryptocurrency than ever before, it is still seen primarily as a form of investment. This is especially true of coins like meme coins that have the potential to post big returns and are generally considered degen investments. These types of investments are popular with younger investors who are more risk-tolerant.
An Alternative To Traditional Investments
In March 2024, the Indonesia Stock Exchange implemented full call auction measures which make it more difficult for a stock to be considered for inclusion. This has led to many potential investors looking for alternative investments. Although regulated in the country, cryptocurrencies are easier to invest in and more readily available, which makes them a popular alternative to traditional alternatives.
Updated Regulations
Indonesia regulates cryptocurrency as commodities. In 2023, the country launched its own bourse and stipulated that any exchange that wished to carry on trading must register with them. In October this year, regulations were expanded, requiring exchanges to partner with local government bodies to be allowed to continue trading.
The deadline for exchanges to meet these requirements was recently extended until the end of November and, according to reports, 30 exchanges have applied with several already acquiring full licenses to continue operating. Some expect further expansion of regulations that would see cryptocurrencies treated as securities, rather than commodities, and the government continues its efforts to educate and safeguard investors.
Although the government initially took a very strict stance against cryptocurrency, it has recently softened its position. It is viewed as having some of the more advanced crypto regulatory frameworks in the world due to these changes and requirements. This helps make cryptocurrency an appealing investment for many people.
Conclusion
The Indonesian cryptocurrency industry is advanced compared to a lot of other countries and has one of the highest adoption rates in the world thanks to a young, tech-savvy population, and an expanding framework of regulatory and protective measures put in place by the government. Despite this, the country is now the fifth largest when it comes to degen crypto investors, who are those who invest in high-risk crypto opportunities like meme coins.