Merchant adoption has always been the Holy Grail of Bitcoin enthusiasts. Supposedly it should have lead so soaring Bitcoin price. But recent overlap of really major adoption (Paypal) and price slump shows that things are trickier.
The dynamics seems to be the exact opposite one: new high volume merchant will never hold bitcoin, due to obvious reasons. They will sell it the second they accept it. So basically it leads to Bitcoin sell-off through huge market sell orders, which are not matched by opposite buy orders, since no one is going to buy Bitcoin in order to pay using Paypal. Existing Bitcoin holders spend their coins, this is the main effect of mainstream merchant adoption.
Don't expect Bitcoin price to rise as new merchants jump on board. Only Wall street can push BTC higher now, but probably the time hasn't come yet. $100-200 BTC price is realistic, Bitcoin economy will still work fine at this price level.
Wanna hear your opinion.
Most retailers use a payment processor like Bitpay or Coinbase. Because of this, the retailer doesn't even see the coin, it goes straight to the processor who then gives the retailer the fiat equivelant. When you buy at Newegg or Overstock, you're actually giving your bitcoin to Coinbase or Bitpay, who I wager are NOT dumping that coin, because they need as much as possible on hand to sell to others. They probably sell enough to keep some baseline ratio for their fiat/btc stores, but it does NOT mean that massive amounts of coin are being dumped because retailers accept bitcoin.
Actually, the recent drop in BTC probably has more to do with the surging dollar than anything...