Can someone explain how this image relates to the title?
Someone made lots of offers of 0.02 bitcoins for lower and lower price
This wouldn't drop the price. There were just too many transactions and their engine couldn't handle it. So:
-> Lag
-> Panic
-> Selling
-> Price drop
Correct me if I'm wrong - I don't know how Bitcoin works - but this shouldn't impact prices. At least, it wouldn't matter with currency trading. You can offer $.02 per Euro all day, and you'll just be ignored with no impact.
If this is not the case with Bitcoin, something is seriously wrong on a very basic head-smackingly obvious way.
Somebody had multiple bots, which were selling and buying at same time. Everyone ignored them, but they still boosted price up since "last trade" was always higher because of this micro transaction manipulations caused by bots.