Mostly correct, except the price dropping squeezes out some miners who have less efficient hardware or more expensive electricity.

It’s possible those miners would find it more profitable to 51% attack, or sell their hardware to someone who wants to.

If prices drop, miners may get priced out of mining if they don't have free electricity. Just like what happened when BTC was mined with CPUs and later GPUs and later ASICs people just stopped mining or using that method. Bitcoin is self adjusting, the only thing that doesn't adjust is the supply which is why some people found value in mining BTC when it was basically worthless.

I don't see how a dropping price has any bearing on a 51% attack.

All IMHO

> I don't see how a dropping price has any bearing on a 51% attack.

Sure it does. Lower miner income = lower security.

This is a logical but too theoretical argument.

Counter-arguments: 1. Mining equipment is a sunk cost usually, so many will keep mining. Inotherwords, its easy to continue operations as normal versus trying to sell off all the equipment (at a loss?) Also, cloud mining contracts are locked in for a year or two, most cannot be cancelled, so mining continues regardless.

2. The difficulty may not actually decrease that much to have a huge impact on the profitability. It really depends on the magnitude of the mining drop-off.

This is the correct answer...