This..
Because everyone is panicing. Talk to any of the lenders that aren't pirate passthroughs. Everyone wants to withdraw their money and are apparently selling on the market.
If pirate really weren't going to pay back, why would he say anything? If he wasn't going to pay back and intended to just dump everything, he'd keep it as quiet as possible and let people support the dumping unknowingly, right?
I think people were moving USD into bitcoin, more so than they normally would to take advantage of pirate's rates. This effectively pushed us up to a year high. Now that the rates aren't available, you have people moving the USD back out of bitcoin.
You are exactly correct. Go read about Elliot Wave Theory. This is panic selling. All of these people think that Bitcoin is going to go to $2 and they want to get their money out now. Once they see the real demand rebound the price they are going to panic buy on the market and shoot bitcoin up 3-5x times the stable price of $5.