The number of traders is increasing more than before as more people are generally becoming more interested in ways to become more financially independent and as thus in search of skills like trading.
Does the number of traders directly affect the volatility of the market? If it does, can we assume that trading was easier before with less traders (less volatility) than now when there are more traders, and the market more volatile?
Number of traders does not have a direct impact or effect on the volatility of the market
Lower liquidity usually results in a more volatile market and cause prices to change suddenly, higher liquidity usually creates a less volatile market in which change in prices won't really affect the direction of the market
indeed even that with a big if, if the coin is matured enough in the exchange with abundant liquidity, and if the coin itself doesn't have any meaningful events going.
basically when something shady gets pulled off by foundation behind the coin itself or when a good news coming out price won't be volatile.
but i've seen many times a coin that has just recently deployed and traded on the market are having so massive volatility that the price always changing tides every minutes.
but overall if a coin already having established place in an exchange for a long time maybe weeks it can easily gains stability, even though liquidity isn't sufficient.
determining relation with price stability, there are many factors that i think could affect it.