With those symptoms and description of what you have, I think you need to do a factory reset and find out if it is a problem when nothing extra is installed. Until you do that, it is hard to know if it is the device or something you have added.
There is a possibility that it is a failing SD card. That could trigger issues when waking that you don't see when booting or normally, but, it would depend on exactly what part of the card was going bad.
But, it does sound like it is crashing when trying to sleep. You say it still has whatever you were reading showing when you closed the cover. That suggests the problem is early in the sleep process or even something to do with the cover. That it sleeps OK when you use the button supports this. The wake is failing possibly because of whatever happens above. It might also depend on if you close the cover after putting it to sleep. To test some of this, I would disable the sleep when closed option.
Also, holding the power button down for 20 seconds is a way to force the device off. It is useful if the device hangs and you doesn't power off normally. After that, it should turn on normally. What happens if you power off the device when it is working OK? Does it power on with the switch?
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