it works in a chain reaction type of event. Panic sellers think "omg, look at these news rewarding whatever regulation or ban regarding bitcoin or any other crypto, I must sell bitcoin right now because the rest of the people will too!!"
There are big amounts of people that think the next guy will sell too. Until all of these market participants aren't cleared out (and again, this may take up to 48 hours due it being a global market) the price doesn't start fully recovering, but once everyone that had to sell sells, bull pressure resumes and the price keeps going up.
The crypto currency market reacts to every single news and when the dust is settled the priced will pop back up,but this time around i am not sure about how the alt coin market could bounce back like in the past but bitcoin will always bounce back and keep on moving,but the time it takes is the biggest question,with all the price hike this year i do think we will have a bear market for some time before bouncing back.
Altcoins will recover too, specially when China has said that the ban is temporary, and not final on all these ICOs. So the ICO bubble will continue. Still plenty of chances to pick the right ICO and get very rich, which is the reason why the coins will recover, people is greedy for easy BTC (because make no mistake, all these gains will be sold for BTC sooner or later, BTC is king, sure some may sell some BTC for fiat, but long term storage in BTC is becoming a cultural thing specially among the millennial that have understood the importance of BTC and see it as a safe bet to get rich long term, unlike trying to win the altcoin lottery)
