People are selling in panic because they are not prepared for this if they are new and often they spending money they can't afford to lose. They think about profit and don't considering the fact that price can go down.
I think people sell in panic when they used borrowed money to trade in crypto or they are new in this market and have not witnessed Market volatility. Sometimes people use high leverage in future trading up to 100X and in case market goes against their trade, they find no other option to close their trade to avoid total loss of their capital. Such type of high risks trades should never be taken in first place and if taken, stop loss should have been used.