A lot of once-promising ICOs get dumped at some point. Some go on to recover relatively quickly, while others wallow at the bottom longer than anticipated. This can cause investors to decide to save what they can of their initial investment.
One of the top reasons why people sell is simply the need for cash. Many issues crop up in people’s daily lives to warrant an immediate need for cash, and sometimes this leaves them with no choice but to sell part of their investment.
It could also be that one deems another investment opportunity more promising and decides to liquidate parts of the original investment for another. Sometimes the project simply isn’t living up to expectations. It may be that the project team has not been following their outlined roadmap or not taking other basic steps that could excite investors. Such steps include not communicating enough, not seeking to or getting listed on big exchanges, and so on. Being patient is a virtue that many in the crypto world lack.
Price manipulation could also come into play, especially by the use of trading bots which are used by some traders. Investors who own significant quantities of a token are known as whales and may be able to control the price or manipulate it to their advantage.
Overall market outlook is an important factor, too. Often an overall clump across all the major cryptocurrencies can have ripple effects as investors lose confidence in the entire sector. Investors have different time horizons, and some with short-term mindsets may sell during a price decline for fear of further drops. Inexperience can also lead those deemed to be “weak hands” to panic sell in the event of a drop in the price of the token. A combination of many of these factors acting together can turn a healthy correction into a sharp and sustained drop.