I'm terrified whenever somebody covers my mouth with their hand. I feel like I can't breathe even though I can still breathe out of my nose. Sometimes me and my older brother wrestle and tackle each other for fun, but when he puts his hand over my mouth I go crazy. I start screaming and hypervenalating. It's so weird though, because I feel like I'm going to die from oxygen loss. Can somebody please tell me if this is normal??

Hyperventilation expels too much carbon dioxide from your body, resulting in a change in blood circulation, resulting in a reduction in the diameter of arteries, resulting in less blood flow and therefore less oxygen to the muscles and brain.
Symptoms include dizziness, numbness, and a few similar ones that all serve to reduce your performance.
Anxiety is a common cause as well as a symptom of hyperventilation.
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TL;DR: Hyperventilation actually reduces oxygen supply to the brain, worsening the feeling of anxiety and light-headedness.
If you're worried about lack of oxygen, you need to actually breathe slower.
You should try remain calm and beat his ass while in your normal, high-performance state.