Panic trading isn't good for your development as a trader because it'll take out the confidence that you'll need to make some decisions that can either make you money, save you losses or prevent other losses that mightn't be money. You can lose your mind or have some illness because you're always having panics when the market is falling.
The absolute fault is not on the traders in my opinion and they are not as stupid as kindergarten children but because they are fooled by the market, a market that is too much drama. The psychology of traders is actually good, but policy makers always think of their own interests in fixing or publishing data that scares market players. Are we just pawns in this market? Just look at the market last night, it's easy to speculate again, ETH was hacked in Bitget, like a short film made by them.