To the extent that the investment philosophy leans more towards "HODL" as prices decrease, trading volumes will go down, and trading volumes predicate volatility.
This happens in all markets. Precipitous price drops scare away buyers and trigger loss aversion (and an aversion to marking down positions) in sellers. That leads to the market transitioning to an illiquid regime and non-viability for exchanges.
I don’t think we’re there yet with cryptocurrencies. (Beanie Babies took over a decade to resolve.) But it may be what Coinbase is guarding against with this move.