This depends on the cryptocurrency you are trading. if you are trading Bitcoin holding it is the best move if the price is dropping. Every Bitcoin halving there is a pattern that Bitcoin will go into a bullish market and eventually break ATH. So holding Bitcoin when price is going down is the best move to avoid losses although it may take some time.
If you are holding shitcoins, then the moment the market goes down, it is best to sell to avoid further losses. It has been observed that shitcoins are shortlived markets, once they dropped there is a huge chance of not recovering leaving most people who holds with worthless tokens/coins.
Yes when cryptocurrency market drops it is generally smart to hold Bitcoin if its price falls because historically after halvings Bitcoin tends to rise and hit new record highs due to its limited supply. However if anyone own shitcoins it is usually best to sell them quickly when market goes down to avoid losing more money like you advised already. This is because shitcoins mostly drop much faster and rarely recover leaving investors with worthless tokens. So key is to know difference between strong valuable cryptocurrencies and highly speculative ones.