You missed a sell off in the middle of the August and September lines.  But that doesn't fit your observation.

Nailed it in one.  I use bitcoins as a convenient tool for speculation in a completely unregulated market.  It's kinda fun, sometimes.  I don't buy narcotics so haven't availed myself of Silk Road, the one commerce area where bitcoins are clearly superior to other forms of payments.  I don't transfer money internationally either, which is another area where bitcoins can be useful.  As long as the recipient wants bitcoins.  If they want their local currency then the receiver has to go to an exchange to get the cash, introducing delays and fees, and defeating the purpose of the exercise.
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Push too many people out and the whole thing can be killed off.  Bitcoin right now is built on hope: hope that it will become popular and widely used.  Hope that the price will retrace some of its previous highs.

No currency or commodity exists in a vacuum.  All are compared against at least one other value metric.  Even the best commodity with a proven track record over thousands of years (gold) is priced in US dollars.  Without that metric, how would one buy a piece of gold?  What is its value?  The exact same is true for bitcoins.  You can mine them yourself, just as you can go out and find a piece of gold in the ground.  But there are real costs associated with both actions.  

Even if we price bitcoins in ounces of gold that doesn't change the fact that bitcoins will always be compared to the value of other currencies, either by one or maybe two degrees of separation.

BTW, bitcoin is not a hard asset.  It has no intrinsic value in itself and doesn't even exist in what most people would consider physical form (no, burning it to a ROM or CD doesn't count).  Bitcoin is an agreement between multiple people who agree to give it value.  Yes, there is a limited number that will ever exist, but in every other way it's the same as any other currency.

Halving of the block reward from 50 to 25 may in fact lower the price of bitcoins, not make them more expensive.  Less reward for miners = less return per kilowatt spent on power.  I would be glad to return to this quote in a year's time and see whether it's true.  I honestly think it is.

A similar argument was once made for the difficulty rating, where some argued a higher difficulty rating justified higher pricing.  We've seen that works in the opposite way: a high difficulty yields less BTC per kilowatt of power, causing miners to drop out until difficulty falls in line with the price.  The price didn't chase difficulty: miners chased the price and caused difficulty to go higher.

There are only two things that will make bitcoin retrace some of its former highs:

1) Major retailers getting on board and using bitcoins.  Not 'mom 'n pop' internet stores selling trinkets, but serious businesses with large turnovers.

2) Another speculative bubble based on potential future uses.  This one is unlikely to reoccur.  Burst bubbles rarely reinflate using the same arguments or reasons as speculators are naturally very wary.

Well, you know what they say about hindsight.  Some people were predicting a crash during the exponential run up to $30.  Any look at history would tell speculators that you cannot have a speculative bubble build so quickly and so high on a commodity that's essentially an agreement between a very limited number of people, without a huge crash at the end.  This time it's different, but this is special, you don't really understand how the market works.  The same reasons were recycled this time around.  But I doubt many were predicting a fall to $2 this quickly. 

A very early adopter would still be sitting on a massive gain if they mined or bought when bitcoins were valued at a few cents each.  Not selling at $10+ however could be uncharitably seen as a sign of sheer greed.  A 100x or more gain just wasn't enough.

Another part of the mythos will be fond memories of the brief $30 bubble.

The costumes are already on sale:
http://www.zazzle.com.au/bitcoin_millionaire_tshirt-235298223683897973

"Are you a bitcoin millionaire? Are you still mining away with dreams of retiring early? Show off how loaded you are/will be."

Ahh, those were the days.

There isn't really a price to support.

The speculator who buys a bitcoin at 10c/btc may think 30c/btc is a fantastic price and sell.  Who wouldn't want to triple their money almost overnight?  Difficulty will auto adjust as miners leave due to the flagging bitcoin price.  At current difficulty levels it only makes sense to mine with 'free' power, stolen power, or if the miner doesn't care about economics at all.

http://en.wikipedia.org/wiki/Collectivization_in_the_Soviet_Union

It was pretty messy, caused much suffering and death, didn't make the poor any richer and the rich (those who lived on through political connections) didn't get any poorer.

This is the key problem.  We need to attract more buyers to raise the price without making it sound like we're trying to sucker people in to a dodgy investment.  One that has fallen 93% in value from its brief peak.

Us: "Come join bitcoin.  Buy some bitcoins"

Them: "Okay, why?"

Us: "So that the price of bitcoins will rise"

Them: "Who holds the existing bitcoins?"

Us: "We do"

Them: "So, why exactly is it in my interest to buy them and help you out?"

Or tranquilized.

Many people post on these forums with something along the lines of: "Let bitcoin fall further to X, I'll just buy up all the cheap bitcoins".  The only problem is the poster assumes the price will go up from that point.  What if it keeps falling further and there's other people out there thinking 'let it fall even further, I'll buy all of them at price Y'.  Catching a falling knife, is the saying that comes to mind.

I wouldn't worry about it too much.  This thing isn't falling below $2.

Is bitcoin legal?  AFAIK no country has declared it to be illegal.  Even then, does it really matter?  Online poker is illegal in the USA but thrives world wide.  Alcohol is illegal in Saudi Arabia but it doesn't stop me enjoying wine in Australia.

Speculative bubbles rarely reinflate.  What people hope and wish happens is usually different to what is a realistic proposition.

The beautiful design of bitcoin ensures that people dropping out of GPU mining wouldn't kill bitcoin.  The block generation rate remains the same regardless of how many people are mining or what they're mining with.  The only significant danger is miners dropping out en masse in an instant, with a large number of blocks to go before the next difficulty reset.  Unless bitcoin's price drops well under $1 from today's levels I don't really see that happening.  There are enough people mining with 'free' or stolen electricity to keep it going anyway.

That explains a lot of the strange trading activity we see.  I would bet most trading on MtGox is program driven with scant human oversight.

It's ironic that a Utopian commodity/currency designed for freedom is being heavily affected by high frequency trading, short trading, and other tricks the 1% on Wall Street use.

You didn't use a log graph.  We're still in a massive bull market on a log graph.

I am The Manipulator.  I will pwn them all, soon.

Probably signaling flares.  The Titanic was so.... titanic, when it went down that it made the entire ocean list, by the looks of that image.

Boom.  Dumping several thousand BTC has just pushed us past $2.  New post bubble lows.

Catch the trading wave and ride it in.  Market is rising again.  The trend is your friend, and so is the manipulator.