There are no configurable settings that control the appearance of the Pencil icon. It don’t have an iPad Air with which to offer direct comparison - but instead use a fifth generation iPad Pro 12.9 with a second generation Pencil; here I see appearance of small Pencil icon for only a few seconds - during which the iPad does not freeze.
Perhaps begin with performing a forced-restart of your iPad - as this will often clear an isolated software issue:
- On an iPad with a Home button: Press and hold the top button and the Home button at the same time. When the Apple logo appears, release both buttons.
- On other iPad models: Press and quickly release the volume up button, press and quickly release the volume down button, then press and hold the top button. When the Apple logo appears, release the button.
Otherwise, you might consider “forgetting” the Pencil from your Bluetooth settings - and then re-pair the Pencil with your iPad. Again, a precautionary forced-restart after deleting the Pencil from Bluetooth settings may be helpful.
If you are still unable to resolve the issue, I recommend that you seek assistance directly from Apple Support - or the Genius Bar at your local Apple Store or Apple Authorised Service Provider (AASP).
You can contact the Support Team using the Get Support link at top-right of this page. Alternatively, you can initiate and manage your support cases using the excellent Apple Support App. If not already installed on your iPad, the App can be downloaded from the App Store:
https://apps.apple.com/gb/app/apple-support/id1130498044
If visiting the Genius Bar, making a reservation is recommended:
Genius Bar Reservation and Apple Support Options - Apple
