Could the price drop between July and September 2011 have been caused by a bot? In July 2011, 1 BTC was trading at above $10 USD. By September, the price of 1 BTC had fallen over 50%, and at the time of writing (October 2011) 1 BTC is trading around $2.50 - $3.00 USD.

In a forum thread one of the pool operators for bitcoinpool claims this is due to some bot forcing the prices down:


  Fairuser detected a buy/sell bot on the better portion of exchanges
  (currently, only Bitmarket (EUR) seems unaffected) that is
  consistently keeping the value of BTC low while it's generating tens
  of thousands of dollars worth of transactions across the exchanges at
  a profit of 2 - 40 cents per transaction. We're still unsure if it's
  intentionally dropping the price, or if it's just a side-effect of the
  way the bot is designed.
  
  Either way, the bot is entirely responsible for the price drop from
  $10 USD to $5 USD.


Is there any evidence of such a phenomenon, and if so, what could be done to stop it?
Since the bot exists, and the people who wrote it presumably wish it to perform every transaction it performs, it reflects real supply and real demand. Why would you want to stop it? There is nothing inherently good about a high price.

Personally, I think the drop in value was due to the bursting of a speculative bubble. The price was previously kept high due to press attention that made people think Bitcoins might be a good investment. As soon as everyone who was going to be brought in by the hype was brought in, the demand started to drop. This caused a small price slide, which induced a lot of panic selling from people who thought the speculative rise would continue forever. Once the price starts dropping at the end of such a bubble, more and more people try to sell out to minimize their losses. Once everyone who expected a short-term profit sells out, the price stabilizes.

We're now back at that relatively stable floor, waiting for the next hype cycle to start another speculative bubble. Until Bitcoin's price is driven by its use as a real medium of exchange, this pattern is likely to repeat over and over.