The sort of bot he's describing would be designed to mask large purchases and prevent them from sucking all liquidity out of the market temporarily or spiking prices.

Let's say I want to buy 500 BTC at $1000 (to make the math easy). I wire Mt Gox half a million bucks, and try to buy up 500 BTC all at once. This moves the market massively because that's a sizable chunk of existing sell orders. To prevent this, I could instead buy a few BTC a minute for the next couple of hours and I wouldn't drastically shock prices or be as notable. Prices would still move upwards (because more demand in the network) but they wouldn't spike. Or Mt Gox could keep a floating reserve, I could pay a free to lock in the price and move the money around internally to Mt Gox, and they replenish that reserve a few BTC at a time (taking on price risk if their reserve is depleted when prices are high, but making profits if they wait to refill that reserve until prices are in a trough).

Note that I have no evidence this is the case, I'm just trying to explain what he claimed was the cause.

This kind of stuff certainly happens in the capital markets.

Bingo. Bang on.

This is exactly what I meant.