When markets crash or the price of cryptos crashes, you always hear the media say things like “billions in wealth have been wiped out” implying that the market itself somehow took all these peoples money, and that somehow all that money has "vanished".
Money doesnt vanish during a market crash. Each trader/owner, simply sells to someone else who buys off them at a cheaper price than they paid. So the seller takes a loss and is out.
If price continues to fall, that next buyer then sells for a cheaper price, at a loss, to another buyer who believes the price will not go any lower.
As the price does falls lower someone else buys off them thinking it wont go any lower. It does. So that person sells at a loss.
This process is repeated over and again. So the money doesnt go anywhere but to other people in that market. The people betting that market will fall. For every loser there is a winner, by definition.
Each participant involved takes a small loss until the price finally finds a bottom. Thats when the smart people/traders buy (back) into that market. The few people who actually know how to play this game.
The ones who dont know to sell as its falling (the punters) lose it all simply because they dont know how not to lose playing this game. They have no idea what they are doing. Those people soon realise that this is no game.
Then they go onto facebook and whine about their own stupidity.