Yes, it is possible.
In fact there are countless numbers of incredibly tiny asteroids in a small areas called the [Kordylewski cloud](https://en.wikipedia.org/wiki/Kordylewski_cloud).
But as for why they aren’t in the upper atmosphere, if they were the atmosphere would slow down the asteroid until it crashed into earth and became part of earth.
This is pretty much how the earth was formed.
Just lots and lots of asteroids getting too close and crashing and building up.
As for why there aren’t any big asteroids.
The earth is going around the sun.
The moon is going around the earth.
This means that the gravity fields are going all over the place and there isn’t much of a safe zone for things to end up in.
Either it crashes into the earth or moon or sun, or just get flung out elsewhere.
The Kordylewski cloud are located where the gravity fields of the earth and moon sorta cancel out. These places are called LaGrange points. But the odds of something getting there at just the right speed are so low that only tiny asteroids have hit those long odds.
Big planets like Jupiter are so large that they have enough gravity so there’s actually big stuff in some of their LaGrange points.
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