Greed and fear is in every market. I don't think bitcoin traders or investors are inherently more "greedy/fearful" than those who trade stocks or oil....
Ok, perhaps the greed level is similar, but the fear is stronger here.
How many people take insane risks to invest in crude oil,
the big new thing that is unlike any other?Wrong. You are cherry picking one example. What about biotech? Tons of people take insane risks in $5 biotech stocks, for the "big new things" (genetically modified goats with spider genes or whatever) that is unlike any other.
Greed and fear is in every market. There are low-risk investments and there are high-risk investments. Even within the cryptocurrency world, there are even ways to bet on Bitcoin being stable (high risk) or Bitcoin being volatile (low risk, as it tends to be volatile.)
You are what's behind it. You have no belief in the underlying value of the security/commodity. You just want to trade it to "make" money. That behavior tends to magnify trends...
Lol. If
that is what magnifies trends (rather than underlying low liquidity and other issues outlined by OP, you know, obvious things) how come DOW NYSE S&P other huge markets don't see wild 50% swings in an hour's trading?
This is a common misconception, that the reason for the BTC volatility is "the people who don't care about BTC and just want to make money off of it. Whether or not you are a "true believer" is completely irrelevant because it is a 100% subjective value judgement, therefore, you can't even prove or disprove the statement - applied general semantics is not on your side if you attempt to use subjective value judgements to support an argument.
Op says (I'm guessing you didn't read this part)
My theory is that it's a unique combination of bitcoin's low float, the ineptitude of the primary exchange mtgox, and a young market (only 3 years old) that lacks sophisticated liquidity provision (i figure most of the supply probably belongs to the major miners, whom have more expertise in technology than being efficient market makers). Along with that, it is also difficult to move a lot of cash around to all the major exchanges, and to short sell, creating barriers to entry for bigger money players who could add a little liquidity. There are one hour bars that represent 50% and 100% moves... in BOTH DIRECTIONS! When I watch it trade on clarkmoody, it just strikes me as so inefficient. Like the people who are making the biggest decisions probably never traded their entire lives. They send market orders down for 20 straight points, and then the other direction for 15 points within the next 5 minutes! Who trades like that? Or maybe something else can explain that phenomenon? Another crazy anomaly to me was the lack of volume increase while the price kept soaring... usually bubbles require increased participation until there is nobody left to buy, or total short seller capitulation (which isnt possible in this market). Almost every parabolic chart has increased volume towards the peak.
The only market that I have ever seen comparable to bitcoins in terms of how fast it can rise and how easily it can fall, are OTCBB bulletin board stocks. Pump and dumps, basically (though not all of them, see FNMA, FMCC both which recently had a parabolic rise and fall but are real companies). Not saying bitcoin is a pump job, but there are some apt comparisons. For one, the OTCBB is highly illiquid. They are not like their NASDAQ/NYSE counterparts where you just click a button and get out of a position within milliseconds. 95% of the time you can out reasonably well, but when there is a panic (or a squeeze), your fill is at the mercy of the market.... kinda similar to getting out of bitcoin near its highs with all the lag on mtgox and all the bids disappearing.
OP's entire premise is that the volatility is NOT a result of "people not believing in bitcoin" but rather the very market structure itself, including the factors that OP detailed in his post.
You attempted to respond to this not by [providing a thorough, well thought out refutation of his points - explaining why, in fact, it is not the market structure including numerous factors explained by OP, but the speculative "day-traders" who "don't care about bitcoin."] but by simply saying "Lol no dude, You're the reason it's volatile, it's people like you who don't 'care' about bitcoin."
Like a champ, you simply stated your position as if it is self-evident, providing absolutely no support or reasoning whatsoever. For this, I give you 10 fail points
Bitcoin does not have feelings. Bitcoin is not God or Jesus or a religion. Bitcoin is not your girlfriend. Bitcoin doesn't care if you care about it, doesn't care if you "believe" in it, doesn't care what percent of your coins are saved and what are spent, doesn't care whether people label you as a spender or a saver even if you do both, doesn't care what your feelings are. Bitcoin doesn't care if you pray to it every night.
NYSE and the Dow Jones and other huge, highly liquid markets have "Evil speculators" "day-traders" "rich hoarders" and other types. Sure, there is volatility, especially with HFT, but the Dow doesn't lose 50% of its value within hours and gain it back in a week. The dow doesn't make wild 10-20% swings every single hour. On the occasion that something like this happens, it is an HFT glitch once in a blue moon. If "evil speculators" "day traders" "people who don't pray to their bitcoin altar every night" "people who
don't make sure to spend every single one of their bitcoins lest they be labelled a hoarder" exist in other markets with comparatively LOW volatility, why are they the problem in Bitcoin? Bitcoin's problem is low liquidity, no market-makers, poor infrastructure, and all the other problems OP outlined - everything BUT the "evil bad people that hate bitcoin."
bitcoin baby ya! 
