Exchanges don't provide fiat on/offramp. Exchange users do, by making deposits.
Every dollar that a user withdraws from an exchange is a dollar that was (already!) deposited by another user.
Every dollar that a user withdraws from an exchange is a dollar that was (already!) deposited by another user.
Day 1: Alice buys 1,000 Bitcoin from Bob for 1 USD on a street corner
Day 2: Market price on the street corner is 1 Bitcoin for 1,000 USD
Day 3: Alice sells 1,000 Bitcoin to Charlie for 1,000,000 USD on a street corner
The street corner doesn't have to borrow 1,000,000 USD from a bank.
Charlie brings the USD to the trade.
In a panic, you need to flip this scenario on its head. Charlie is not going to show up and Diana, who got into Bitcoin in 2009 and hasn't done anything since, decides to take her profits on 1,000 BTC. So this system has $1,001 to meet $2,000,000 in deposit demand, assuming neither Alice nor Bob has withdrawn their USD and some Bitcoin hodlers pile in.
Particularly popular liquidity pools eg BitPesa or Coinbase may then be put under pressure to either cease operations, draw down liquidity facilities to buy BTC, or start selling their own assets in order meet demand of BTC holders who want to get out. Those are not good choices.
No one is saying a price crash isn't possible. But it won't be caused by some liquidity issue, it'll just be people selling off.
You're essentially saying that the exchange should artificially prop up the price of bitcoin with its own money during a panic.