But 19-year-old striker Victor Moses has been linked with a move to the Premier League and Warnock believes the decision was premature.
"The timing just astonishes me. There's a week to go in the transfer window and we are about to sell Victor Moses for millions," he told the Independent.
"I'm devastated, shocked and hugely disappointed," the former Sheffield United boss added in his column for the newspaper.
Nigerian-born Moses, who has notched six goals in the Championship this season, has attracted the attention of Arsenal, Liverpool, Manchester City and Tottenham, and has even been linked with Spanish giants Barcelona and Real Madrid.
Warnock now fears that other promising youngsters, as well as Moses, will be leaving the Croydon club.
"I know there'll be clubs eyeing up all the talent we have coming through our youth scheme and thinking they can get players for a song. Let's hope that doesn't happen. As I said, I really cannot understand the timing."
Despite his misgivings, Warnock said he sympathised with chairman Simon Jordan, who has been searching for new investors after announcing his intention to sell Palace last year.
"I feel for Simon... who's been working harder than anyone can imagine to keep the club going and secure its future. I know he's as devastated as I am," said Warnock.
"The players are also in shock. We had a meeting and explained as much as we could to them."
Clubs going into administration are automatically docked 10 points, so Palace will drop from ninth place to two spots above the drop zone.
They take on Newcastle on Wednesday but Warnock believes his team are up for the challenge which lies ahead.
"I'm obviously disappointed from a playing perspective as we'd been doing so well - we've only lost twice in our last 15 games - and I really felt we'd a chance of making the play-offs.
"Now, suddenly, we find ourselves in a relegation battle. They're a great bunch of lads and such is the spirit they've shown in the last few months, when things have been difficult, it really wouldn't surprise me if we get a result."
The Football League has yet to receive formal confirmation from either the club or the administrators, but Palace officials are due in court on Wednesday to face a winding-up order from HM Revenue and Customs.
Once the Football League has processed the official documentation the 10-point penalty will be applied.
Source: BBC Sport
Source: BBC Sport