Panic selling occurs when a large number of investors simultaneously determine to liquidate their holdings, typically driven by fear of market declines, negative sentiment, or adverse news affecting the underlying asset or the market overall. This behavior creates a self-reinforcing cycle, as increased selling pressure can lead to further declines in asset prices, inducing even more panic selling. It is especially prevalent in volatile markets, such as cryptocurrencies, where price fluctuations can be extreme. The phenomenon can manifest during broader market downturns or crises, when investors fear that they may incur losses if they do not act quickly. While panic selling may lead to short-term liquidity in the market, it can also result in significant price volatility and long-term negative implications for the asset's value.