Things get really out of hand when there's a big move outside of the US trading hours because liquidity is so thin. Usually it recovers of course, the scary thing is when it degenerates into a 2020 covid style selloff - 10% down day followed by a number of 10% down days.
Those times are not coming back. We need to stop looking at market behavior 100 years ago. Modern markets and society function very-very differently. Even looking at 2008 as a model for how modern crises happen is very likely to give you incorrect conclusions.
Everything has sped up drastically. Information (whether valid or invalid) is priced in vastly faster. In 2008 you had a month to buy various crisis insurance products (e.g. variance swaps), in 2020 you had days. The next crisis you might only have hours.
Sure, fundamental human behavioral patterns stayed the same, but these are things like herding behavior (monkey see price go up, monkey buy, monkey see price go down, monkey sell), panics, various interests fanning the flames one way or another, etc. But the interconnectedness and the speed at which information travels across that interconnect has increased orders of magnitude just over the last decade.
It's important to recognize that the increased processing speed has a non-linear impact on the system as a whole. New kinds of failure modes and boundary conditions arise that never happened before. New feedback loops get amplified and old ones stop working as they operated on different time scales.
Lots of panicked investors gonna be rushing for insurance tomorrow. :DDD