I wanted to add an observation to that issue. In my opinion, the vulnerability of the market to drop significantly because of a medium-sized sell order, is not only caused by a lack of market size but also by the expectations of the market participants.

On the EUR/USD forex market nobody (or at least almost nobody) would place a buy order for 1 USD on EUR 0.50 for example. Most orders will be very close to the current price, because people know that the price is extremely unlikely to drop more than ~5% in a single day. In Bitcoin, we have lots of orders well down and above the spot price. People are expecting Bitcoin to rally and drop more heavily, so they set their orders accordingly, to benefit from these moves.

I think this is a kind of vicious cycle: Bitcoin is volatile. So it attracts people who want to benefit from the price swings (positive and negative ones). And this leads to thin order books that do not "back" the Bitcoin price very much but make it vulnerable to drops - and to FOMO on the other side. Your observation that many people trade with too high leverage ratios is also connected to that - it's simply too easy to make profit with it, so people try to bet on big price swings, even if the risks are large, too.