1) Could the reason be that they have inflated their trading volume , which is now they cannot sustain the real volume at time of dip
Nah, those have already went down long before recent events.
2) They lack liquidity
3) Exchanges have invested their liquidity somewhere else which is becoming hard to recover
The most likely reason (2 either implies 3, or 1 - and I already ruled out 1).
4) Does it has to do anything with the global inflation that we might see in coming future
Absolutely not. Nothing serious has even happened yet as far as inflation is concerned. It's mostly due to
bad capital management which the other members have highlighted.
5) Do you think its good for the market where cheap players would be shutting down and people can have more robust platforms in future where they would be ready in situations like this.
History repeats itself, and nobody seems to learn a lesson from events like these, with rare exceptions such as Coinbase and Binance.
6) Most Importantly its the people's money, will traders be able to cope up or have faith in trading crypto in future if they lose money like this??
If they leave crypto because the wolves of wall street scammed them out of their money, that's their problem. At least the decentralized crypto communities are full of very reasonable people who'd think twice before handling a stranger's money.
