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Does it matter why?

The fact of the matter is that they do panic, and it's not actually useful for market stability. Some might say "too bad so sad, don't be tools". But a market where people can actually trust the intent behind buy/sell orders is going to be better for everyone involved.

The objective isn't to have the least regulation possible, but to try to have the "best" market possible

This is a self-correcting problem. Traders who fall for fake walls lose their capital, and thus influence on the price, to those who do not. The feedback loops and incentives of the market cause it to evolve toward a more price-stable configuration.

I think this happens when a great percentage of participants of an exchange are merely traders, speculators, and bots than actually using the currency for transactions in every day life.

Isn't this a way to prevent traders from anticipating and profiting from arbitrage opportunities? In some sense, I see this as a sign of a healthy market, no? If traders are looking for signals like average the price of sell orders, they should remove outliers like this, or not do arbitrage.