As your website got ranked in top positions use subfolders, let's say for an example if your primary domain in English is abc.com then have subfolder like www.abc.com/de/

Avoid choosing subdomain, If you go for a subdomain, you will lose your current authority as Google assumes subdomains as a separate domain.

As you wish to develop your website for other language use properly translated content from the native speaker of the language and use it under subfolders. If you simply use any API to translate your content then you will hit by Google's Panda Update for having poor content quality.

Avoid creating a new domain, instead, book that domain and redirect to the subfolder version (www.abc.com/de/)

Hope this strategy helps you!

There may be many reasons for it. Have you checked the bounce rate? If the bounce rate is high it might be bot traffic. As you said direct traffic there are chances you might get a visitor from referrals.

You have to use 301 redirect. Read this link from Google Search Console help https://support.google.com/webmasters/answer/6073543?hl=en

you can preserve the "link juice" from SEO perspective if you use 301 redirect.