1. The big drop was that BTC was a fad.  BTC only hit above $1,000 because of the massive publicity, and the swarm of people looking to make a quick buck.  As soon as the price started to fall, these people fled with whatever they had left.  After all of the ex-Beanie Baby investors left the market, the price was cut in half.  The decline since it fell back to $500 is a combination of use and mining costs.  There's still little to no point in using BTC for transactions, and little to no vendors that accept it.  Additionally, as mining is being more and more done by companies / in areas with cheap electricity, it's no longer profitable for many individuals to make money, so they're just exiting the market, or they're transitioning to altcoins.

2. If something's public news that everyone's talking about, then odds are you missed the boat.

3. Up to you.  You could hold and wait, but the longer you wait, the more the value of your miners will decrease.

4, 5, 6, 7. If anyone knew these answers, they wouldn't tell you.