People confuse investing with daytrading.
When you buy a cryptocurrency and have it, nothing happens to it during a flash like this. Because you are an investor and intend to sell the coin in a distant future for huge profit.
When you do daytrading, you do not own any coins. You make bets that the coin will rise or fall soon.
And that is the morale of it. When you make bets, the rules of gambling apply to what you are doing. When you buy something, the rules of investing apply.
Nobody who had coins lost anything when the flash happened. Because there is no stop loss order for coins that one HAS. People can panic though and sell their coins when a flash like this occurs. They suddenly become gamblers because of their panic.
There is a nice saying in poker. When someone is steered by his emotions, overriding his rationality, experienced players on the table notice this and know: he is on tilt. They can then easily drain out all the money of him they please.