I don't see why people think merchant adoption would cause the price to drop drastically, if someone with bitcoin wanted to buy something that wasn't for sale for bitcoin, they would just sell to a fiat currency and make the purchase. It's a weak argument imho to say merchant adoption is driving the downtrend, the cost of mining combined with the Gox aftermath is more so to blame.
False. I hold 10+ BTC and I only spend them when I can spend BTC. Otherwise I just use fiat. I do not convert BTC to fiat to make a purchase - that's done on the merchant's side