Panic selling happens when the market falls and fear leads you to sell everything quickly to 'save what's left'. It is the most destructive emotional reaction in investing: it typically occurs at the worst possible moment — when prices have already fallen sharply and are about to recover.
💡 Example
Bitcoin falls 40% over two weeks. The headlines are negative, social media is full of pessimism. You sell everything. Two months later, the price has recovered and surpassed its previous level. You have locked in a real loss and also missed the recovery.