My guess is that there is very little real liquidity in the market, and most of the value is just paper gains that can't be fully realised, i.e. a single person

My guess is that there is very little real liquidity in the market, and most of the value is just paper gains that can't be fully realised, i.e. a single person can fully liquidate to dollars, but if everyone does it, many people will end up holding the bag. When someone tries to cash out, exchanges might need for someone to put some money back in to avoid a liquidity crisis. I believe this is especially true for tether-based exchanges, which Coinbase is not. Then again, this is just my guess and I can't provide anything to back it up. Maybe it's just due to a buggy cowboy-driven codebase and awful customer service. Time will tell. If it's a liquidity issue, exchanges will eventually go belly up, if it's a codebase/customer service problem, they might get to a point where it's actually fixed and things just work.