There are many different instances why a watch can lose value, and one of the most common is the end of a fad. One of the most striking examples is the boom Swatch had during the Eighties and Nineties. These cute quartz watches had a formidable feature: they embodied the collecting instinct of people through inexpensive timepiece accessories that everyone could afford in quantity. And since some of these watches were produced in small numbers, this created the conditions for forming an enormous "speculative bubble," which sustained this phenomenon for several years.
Then, because of the massive amount of references and models published, the public started to get tired of Swatches. As a result, their prices began to sink until they reached the current level where most people are no longer interested in these watches, apart from very particular cases that represent the exception: the recent evaluation of a used Swatch is one-fifth of their cost in store.
In this particular case, the "bubble" that sustained the prices has deflated - but we must also remember that the technical characteristics of these timepieces are modest - something that can indeed not be said with the current "bubble" that concerns Rolex quotes.
As you can see, there are fashions in watchmaking. And when the fad passes, the quotes go down, sometimes dramatically. For example, Franck Muller watches were highly fashionable in the 1990s, but since the launch of Richard Mille, Franck Muller's clientele has switched to buying these other timepieces. With the result that today, Franck Muller watches are vastly undervalued in the second-hand market (and, in some cases, are a great buy).