Yes this does affect. The volatility of a coin is determined when the price fluctuates a lot. Now why does the price fluctuates? It’s due to the traders only. When traders buy or sell the coin, it lead to the increase and decrease of the price. Now if more number of traders do it simultaneously, then the price can drastically drop in huge scale. Hence number of traders are directly proportionate to the price of the coin and volatility. Hope this helps you OP.