Re: Why did cost of bitcoins surge to 1200 then drop to 500 and 200?
I still remember this fairly clearly. That day, US Senate had a hearing and the price surged all the way to $900 before briefly crashing and China investors started to invest and accept Bitcoin then it surged past $1000. It was truly amazing I must say. Bitcoin was heavily regulated in China and it started to slide gradually. However, a few months later, Mt Gox became insolvent and the price crashed due to it being the largest exchange at that time and loss of confidence.
There definitely had not been a single 'day' that had an insane rise. It took the market almost 2 months to reach that price, before there were 2 huge dumps that brought it down. 
The price had risen due to several factors. Bitcoin at that time had insane media hype; another important factor was Willy (the bot from Mt.Gox).
The price had bounced back. This is normal due to the fact that bubbles usually collapse. However we survived major hacks over time which kept on pushing the price downwards. We should be seeing a positive trend very soon as we've established a decent price at $200+.
Hope, bigger idiot, speculation, bots, Chinese exchanges etc are the reasons give for the rise. It is impossible to say why exactly it went so crazy, it started after Silk Road went down though, so maybe people thought it would legitimize bitcoin and allow it to go mainstream.
The fall has been a realization that the market size and growth isn't as big as people thought. Adoption didn't increase enought with the price, so it fell. Some whales also decided to get out at the top, which stopped any further rises.