Can an investor be right about an asset and still watch its price fall?

A financial crisis can temporarily change what determines prices when investors stop asking what they want to own and start asking what they can sell.

Some of the market's most desirable assets become sources of emergency liquidity.

When the need for cash overwhelms the desire to hold
Prices reflect transactions at the margin.

An investor who considers an asset undervalued has little influence on today's price if they aren't buying.
An investor who must raise cash immediately has no such luxury.

That creates a strange dynamic during periods of severe financial stress. Investors may sell an asset despite remaining bullish on its long-term prospects because they need cash to meet:

redemptions
margin calls
collateral requirements
losses elsewhere
The Federal Reserve described this mechanism after the 2008 financial crisis. As funding became harder to obtain, some borrowers had little choice but to sell assets into increasingly illiquid markets. Those forced sales pushed prices lower, weakened other balance sheets, and created additional pressure to sell[1].

In other words, the asset itself doesn't necessarily have to be the source of the problem.

It only needs to be sellable.

Liquidity can make strong assets vulnerable
March 2020 provided an unusually clear demonstration.

As the pandemic initially rattled markets, investors behaved largely as expected: risky assets fell while traditional safe havens benefited from a flight to safety.

Then the behavior changed.

The Bank for International Settlements described what followed as a "dash for cash."[2] Between March 9 and March 18, investors sold some of their most liquid assets as demand for cash accelerated.

Ten-year Treasury yields rose sharply.
Treasury bid-offer spreads widened dramatically.
Gold fell 12%.
At the time, the World Gold Council similarly concluded that gold's volatility reflected massive liquidation across financial markets, likely amplified by leverage. Gold's liquidity actually made it useful to investors who needed to raise cash to cover losses elsewhere[3].