It only happens if the market is not there to "catch" the sell off. Say there are 1 000 000 X and the current market price is $100 each. If I have 40% of all X and I go to sell it, I first sell to everyone willing to buy X at $100 each. Then I sell to everyone willing to buy X at $99.9 each, etc. Once we stop selling at price Y, we've essentially sold X to everyone who would buy X for between Y and $100.

Note that this implies selling off X always decreases its price. This is not true if Y is $100 (people were willing to buy more X at $100 than we had X at all), but even so a market usually has something like a bid-ask spread, so if we were trading a small amount of X we could maybe even sell it all off without moving the big price.

So really, whether this crashes the market for X depends on how much people value X. If only a few people thought X was valuable, they probably all own it, so it's worthless. If everyone wants X and are willing to pay just a bit less to get it, Y doesn't really change much from $100. There are also non-currencies like equities that essentially have a price floor: below the price floor there is basically no risk that the item will ever be worth less than that (this could be determined by something like the total value of property owned by a business).