Suspension at the softest level should not compress that much by manually pushing on it unless you are really bearing down on the handlebars. Correctly dialed, you'd have to be riding pretty hard to have the o-ring travel up that high. If your suspension was somehow dialed that low that you could actually compress it by hand that much, you would be bottoming out your fork on every bump, which would be a big problem.

If your fork is actually compressing that much that easily, you need to adjust the fork preload. I cant tell if you have an air or coil fork, but figure that out, and look up youtube videos on how to set it up.