This is the most important part of trading or holding. This mostly happens with people who have been in crypto for a few months to a year. But if someone is well experienced and they are familiar with the market situation, they make this mistake way less compared to the newbies. I said less because veteran crypto users do panic as well.
I have been in crypto for a couple of years now. Yet, when the market moves a lot, I get panicked as well. I believe a lot of people panicked when they saw Bitcoin drop below 80K and alts were bleeding.
It really rarely happens to experienced traders, but sometimes even they have to close their trades at a loss to avoid even bigger losses, sometimes you have to accept a small loss to avoid bigger losses. Most often, panic selling happens when the market moves against the expectations of the majority, and this happens quite often. Recent liquidations on the market reached a billion, this shows that there is a lot of money in the market and everyone can lose.