Given how fast the price went back up (two days later, it's basically where it was when the SR story hit), my guess is the dip had little to do with confidence

Given how fast the price went back up (two days later, it's basically where it was when the SR story hit), my guess is the dip had little to do with confidence in bitcoins. I'd suggest it was the opposite. We've seen these dips before, and BTC always bounces back. People sold because they expected everyone else to sell, and they wanted to have some cash on hand so they could buy when the price bottomed out. When BTC_USD was at about $90 on btc-e there were something like 750 BTC worth of buy orders at $75. People knew it was going to dip then come back, so they sold so they could buy (self-fulfilling prophecy).