There was a bitcoin crash so to speak back in September of 2012. I know cause it fucked me when the coins I just bought went down like 5 bucks a coin and I was prepping to get a qp. It wasn't a huge thing but it pissed me off that it happened on the same day I was trying to do my deal. Since then the btc has done nothing but head skyward. Wish I hadn't spent all the coins I had bought for as little as $5....but hindsight is always 20/20 as they say. I don't know too many people that predicted the rate to be hitting the $60 mark as it did today. Crazy fuckin currency that's for sure. Agreed that hedging now is just more money in DPR's pockets. Vendors with large stash's of coins must be loving this dramatic rise.
You're talking about this: http://torimagesbp2vt3u.onion/i/gBgh.png
The drop doesn't look as big on that graph because BTC price is averaged over some time period.
That crash was caused by the pirateat40 scam. There was a lot of chatter on bitcointalk.org beforehand of people fleeing.
If you're going to mess around with bitcoins, you really should be reading the forum and keeping up on the latest news, rumors, etc.
Several factors are helping bitcoin right now. In the last few months, legal businesses like Wordpress.com and Reddit have started accepting it. The FinCen report a few days ago made bitcoin officially legal in the US. It wasn't illegal before, but the US gov had not taken an official position on it. Now it's explicitly legal. That paves the way for much wider adoption among mainstream businesses. And there haven't been any major hacks or thefts in a long while. That helps to build confidence.
Unless some catastrophic event happens, I expect BTC price to keep rising for some time. So not holding onto your coins from $5 is a sunk cost, but you can always buy now and still make money.