The FRR acutally breaks any true supply and demand scenario because it allows lazy people who might not even watch the rate changes to drag down everyone else in a spiral, until some weird correction spike happens in large time intervals.
The FRR does this by
-reacting slowly to upward movements (not a primary reason though, just amplifying the effect somewhat)
-creating a negative feedback loop that does not ALLOW anyone to offer higher rates than those low ones provided by the lazy swappers (frr auto-renewers), only lower rates are ok (as you said about your own bot).

It's a forced spiral downwards fueled by telling people "just put your shit on auto-renew and you won't have to care about anything". Now it's of course right if people who do that will get low rates because they take the easy route. But thanks to the way FRR is implemented it will at the same time drag down everyone else who is not lazy.

The difference to a real supply and demand scenario is that here you basically say "oh, and everyone who is really lazy will automatically impact the swap rates downwards strongly". That's not something that would usually happen in a real market. If all my competitors in a real market decided to be really lazy, then MY PROFITS WOULD RISE, NOT GO DOWN.