You are missing a crucial element in your logic and that is that it becomes more profitable to mine when some miners stop mining. When people stop mining, the blocks are discovered at a slower pace. When that happens, the difficulty drops, and when that happens you can mine more ether using the same amount of time and energy.
So the number of miners will not develop like the snowball effect you describe. Rather, the number of miners is what we would call a stable equilibrium: If more miners join, all other things being equal, the profitability will drop and more miners will leave the system; if miners leave the network, the profitability goes up, and that will attract other miners or existing miners will expand their operation. So a deviation from the number of miners in the equilibrium (a rise or a drop) will lead to a return to the equilibrium number of miners. That is why we call it a stable equilibrium.