It works, when there only institutional investors who have invested in the project. If there are other token holders, like bounty hunters or private investors, they can sell tokens in any reason.
How many institutional investors have invested in crypto startups? They work with billions. Each crypto project costs several millions. But in this case there is no regulation, therefore there are no obligations and guarantees for the investor. No manager of any investment company will risk his career (or perhaps his own) for investing in a dubious business.
Thus, in the crypto market most non-professionals. They are prone to FOMO or panic. In this I see the reasons for such illogical behavior of investors.
Still now crytpocurrency is not regulated in many countries. But cryptocurrency becomes more popular and many countries start to regulate it.