On the other hand, Bitcoinica also offered leveraged trading, which had a large destabilizing effect. There were big traders deliberately moving the price aroun

On the other hand, Bitcoinica also offered leveraged trading, which had a large destabilizing effect. There were big traders deliberately moving the price around, to force smaller traders into margin calls. That problem went away when Bitcoinica did. Leveraged trading is trading with partially borrowed money. If you buy something with leverage and the price falls, you're forced to sell. A wealthy trader can temporarily lower the market price by dumping a bunch of coins on the market at once, knowing that the price will recover when he buys them back; this costs him money, because he gets a lower price for his coins and buys them back at a higher price. But it also forces margin traders to sell out their leveraged positions, at the lower price, which those same traders can capitalize on. These sorts of shenanigans depend on there being unsophisticated traders using leverage (a bad idea for any non-expert trader!), and they get harder as the number of traders in the market increases. Many of the rapid price oscillations we saw were a side effect of this strategy. (Not all of them, of course; the initial rise was caused by the wave of publicity, the fall by loss of confidence when some people lost their coins by storing them on insecure computers or giving them to scammers pretending to be "online wallet services".)