It was an overleveraged market whose uptrend had obviously stalled, and Mike Hearn helped accelerate the de-leveraging.
BFX longs are down, what, 1MM? 1.5MM? I'd hardly call that de-leveraging.
Traders took advantage of the Hearn business. They just waited until dumb money heard the news, panic sold, and are (likely) slowly re-accumulating.
I agree that until the Classic fork is done it's shaky ground, but I don't think that when it's over we're suddenly going to go right back up.