Absolute and Relative Investing Income of Cryptocurrency Investors: An Assessment on Risk Management Knowledge and Practices

Abstract

Cryptocurrency has emerged as a disruptive force in the financial landscape, presenting both alternative investment opportunities and emergent risks to investors seeking financial stability. This study investigates the relationship between cryptocurrency investors' income and their risk management knowledge and practices, addressing a gap in understanding on whether traditional risk management principles apply to highly volatile digital assets. Employing a descriptive-correlational design, the research gathered data through an online survey of 400 Filipino cryptocurrency users of a certain cryptocurrency platform. Findings indicate a significant positive relationship between risk management knowledge and practices and relative cryptocurrency income (p=.001, coefficient = +.173), suggesting that cryptocurrency portfolios are susceptible to effective risk management and do not simply result from mere fluctuations in market value. However, no significant relationship was found between risk management and absolute income. Nevertheless, absolute income was significantly different across respondents when grouped by age, employment status, income bracket, and investment exposure. This implies that older, gainfully employed investors from higher income brackets and greater investment exposure tended to achieve higher absolute gains, likely due to access to greater initial capital.