It cannot be that people are this stupid to sell off just because of this.
Market analysis is determined by the least common denominator. Traders don't base future market projections on what they expect the most intelligent and most knowledgeable trader will do. Its always the opposite of that. Market reactions are always based on worst case scenarios to protect investments and mitigate risk.
When whales look at markets whether its bitcoin, equities, futures, penny stocks or whatever. They always ask: "how will the least intelligent, educated and knowledgeable trader react to this". And that is typically the basis they use for determining what the proper market reaction should be.
Feel free to disagree, I 100% don't mind. But please remember events which do not directly affects markets or stocks like the 9/11 World Trade Center bombings crashed the US stock market to an extreme degree. Its not necessarily the direct impact that matters but rather the psychology and worst case scenario.