A counter example would be Ubiquity that did drop, after the article by Krebs was released.
Generally, bugs, even catastrophic ones can be an excuse to sell a position but never cause a sell-off.
At least that has been my observation.
If cryptocurrencies have a security issue, the entire asset can be irreversibly destroyed with _nothing_ of value left over. Imagine a cryptocurrency called $41TC01N (ShitCoin) has a zero-day that allows any wallet to be trivially compromised, by the time people take action or even understand the nature of the issue-- the attacker could have emptied and exchanged nearly every wallet on the network. The ones left with funds would be worth nothing, because the value has been irreversibly transferred outta the asset. There was a cryptocurrency of some kind recently that is only in existence because the hacker graciously gave it back.
Like, I'm pretty sure, long-term decentralized currencies aren't going to end up as cool as people think they are... distributed ledgers might be, for archival purposes, but like... I ain't seen anything even mildly useful but crappy-DRM, err my bad, I mean NFTs be executed on the blockchain.
The real value is in the code, the minds of the users, and the ledger itself.
That is what would happen if there is a huge security hole (like private keys were generated by a broken RNG… This has actually partially happened in bitcoin [not in a grand scale, but for individual users with some wallets], some coins have been stolen and others given back by white hat hackers like /r/joehoe, … It could be given back, because the errors were either in RNG or similar, and the crypto used was not fundamentally broken. But the day this would happen, a battle tested crypto completely broken overnight… which is very seldomly the case, then no way to know who was the rightful owner… if anyone can sign an equal valid message).
But yes you are right, in other cases that are more likely to happen, things would not break for everybody all at once
But that’s the idea…SWI was overvalued, and when the hack came, they sold off.
Basically, what I’m trying to say is that any overvalued company will sell off on bad news but “good” companies will hardly budge.
P.S. I do believe that Coinbase would sell off on similar news, for a myriad of reasons. But I’ve been wrong enough times that I wouldn’t put money on it.