I just rewrote some thoughts about the panic sell phenomenon — what we often encounter in the crypto market. Maybe many people don’t fully understand it, so I want to share a bit.

Panic sell or mass dumping is when many investors decide to sell off assets into the market in huge quantities within a very short time. This usually starts with BTC and spreads across the entire market. The result is a sudden drop in prices, which can cause some projects to go bankrupt, and the market takes several months or even years to recover. But according to the natural cycle of the market, panic sell is actually necessary for the market to transition into a new phase.

But why does panic sell happen? I see a few main reasons. First are negative external news — exchange bankruptcies, project defaults like the LUNA or FTX cases. These pieces of information spread very quickly, and each person adds a little more detail, making the problem seem more serious. There are also other economic and political events that influence it, such as the market crash in 2021 when China issued a crypto ban.

However, in my opinion, the deepest cause of panic sell comes from human psychology — the fear of losing assets. When bad news hits, investors panic and want to sell immediately while prices are still good to avoid losing too much, instead of calmly analyzing the situation. And truly, panic sell is just a symptom of the market cycle — like the four seasons in a year, the market needs a sharp dip to enter a new phase.

The panic sell process usually unfolds like this: first, negative news related to the industry appears, causing investors to become emotionally disturbed. On the chart, candles start to change direction from small to larger. Then, prices break through all support levels below. The information spreads further, and following the herd effect, everyone begins to sell assets as quickly as possible. This action lasts for a few days or several months depending on the impact of the event.

However, I want to say that nothing decreases forever. Every recession is followed by recovery. History shows many crises in the past, but all of them eventually recovered. Therefore, instead of fearing panic sell, stay calm and wait for the price to bounce back. Data indicates that in a year, the market can drop deeply by 25% or more about 3-4 times, and if you seize these opportunities, your assets can grow very quickly.

In reality, a market downturn is normal and even beneficial. It indicates that the crypto world is functioning normally. After each decline, the market becomes stronger. Everything repeats in cycles, so it’s important to prepare psychologically for these panic sell episodes.

But don’t sell off at the bottom — that’s just cutting losses. If your goal is long-term profit, avoid this action.

So, how to avoid being overly affected? I see a few ways. First, stay calm and always maintain a long-term investment mindset. Set your goals for 1 year, 3 years, or 5 years from the start. With this mindset, you’ll become a true investor who doesn’t care about short-term fluctuations. In fact, short-term panic sell only harms the accounts of those who borrow to invest on margin. Looking at the broader market history, there are always profit opportunities.

Second, instead of panicking, leverage panic sell to make profits. It’s a great opportunity if you understand its nature. You can short the market and wait for signs of recovery before entering. This requires understanding the impact level of panic sell and estimating the bottom.

Finally, always have a solid investment plan. That’s the most important condition any investor must prepare. The more detailed and specific the plan, the better, because it helps reduce losses during panic sell. When planning, ask yourself: how will you manage capital, what trading volume is reasonable, what are your entry and exit strategies, what is your main trading method, and do you have a profitable trading system? These questions will help you build a strong plan to face market volatility, including those panic sell episodes.