So when it falls by 17% it is incredibly volatile and something needs to be done.
I agree, but what?
What about the 2 days prior when the price went up $3000? Even in the depth of the flash crash, the price was up for the week! I understand that some people will have averages of above $10k now (crazy) but a short term crash that recovers quickly isn't a new thing it bitcoin. The actual size of the crash was probably the biggest ever, but the percentage was fairly normal.
A recovery is always expected to happen until it stops happening, or worse, if the price action starts reversing and goes down more and more.
I believe Bitcoin will become a victim of its own market. When the right time to short sell comes, expect the wise traders to be there first.