After the first version of Silk road went down, the price did drop quite significantly. Investors might just have the mentality that a large volume of Bitcoin was generated by silk road as the adoption rate was small then. It rebounded after that, the second silkroad didn't have much impact likely due to the already high adoption rate and there are better alternatives to silkroad.
The first bust caused btc to drop 30% I think.
I guess the media is somehow right after all on what they keep saying on the news , Bitcoin plays a big part on the Darknet marketplace these days .
Bitcoin is a very powerful tool. It has all (well, most) the benefits of a credit card, all the anonymity and finality of cash. Whether it was Satoshi's intention or not, Bitcoin is perfect for illegal activity over the internet. It's also great for porn and buying sex toys. Imagine all the people who's info leaked because of the Ashley Madison hack, I think they would have been safer if they would have used bitcoin (and a throwaway email account). For a long time, lots of the traffic was illegal stuff and people dicking around with digital money. Now it's starting to really gain traction. I am eager to see us burst beyond $1000 again.