How do you know that it was the main reason tho? BTC is already on downtrend before that news spread. Besides that, It will be so absurd to sell now your BTC while you are in loss. You will never suffer a real loss unless you sold your BTC. BTC will regain again it's price within this year and will set new ATH. Price dump always happened during the first quarter of the year while ETH pump during this period. This happened yearly so this is just a normal occurrence on crypto, Price will be back to normal soon.
Exactly. Even when people put out big news supposedly from Japan or South Korea or China, it does not really affect the price, because the trends already happen based on the rumors. If the news further confirms rumors, then sure, the pressure continues but nothing makes the market crash or boom in terms of news. This is just normal for Bitcoin, and therefore normal for crypto.
Holders are looking at potential losses, like you said. And they are naive if they think markets keep going up without first going down.