If you hashed a hash an infinite number of times would you end up with a unique hash? If you took a hashing algorithm for example MD5 and repeatedly passed the output hash back into the algorithm an arbitrarily large number of times would you eventually end up with one unique hash?

My idea is that the maximum number of hashes initially is $2^{128}$ however if you feed the hash back into the algorithm there would be collisions so two or more input hashes will map to one single output hash thus reducing the entropy, if this process is repeated indefinitely would it result in one single hash? or is it possible that there would be a point after which no collisions will ever happen?

This is a thought experiment and is probably not possible but I would like to know.
If you repeatedly apply a generic function on its result, in a finite domain, you tend to obtain a "rho" structure: at some point, you enter a cycle whose length is (roughly) $\sqrt{N}$, where $N$ is the size of the output space for your function. In the case of MD5, $N = 2^{128}$ (MD5 outputs 128-bit values), so the cycle will have length about $2^{64}$ values. You can hash "infinitely", you will never end up on a unique value. See this answer for some details and a picture.

Well, strictly speaking, you might end on a unique value, which would be called a fixed point, but we don't know if such fixed points actually exist with MD5. For a randomly selected function, there is a probability of about $63\%$ that a fixed point exists at all. But existence of a fixed point does not mean that you will reach it. In fact it is expected that for most cases you will end in the "big inner cycle"; if there is a fixed point at all, you will ultimately hit it only with probability $1/\sqrt{N}$ or so, i.e. pretty rarely.

In all generality, when starting from some input and hashing repeatedly, you always end up walking a cycle, and that never ends. A fixed point is a special case of a cycle with only one element. For a given function, one expects that
there is a "big" cycle that you ultimately reach for most inputs, and a collection of much smaller cycles that you almost never reach.