Based upon the following chart, trading volumes for Bitcoin plummeted some time in January of this year and haven't recovered. Can anyone explain why?

https://data.bitcoinity.org/markets/volume/2y?c=e&t=b

This leads me to think that the recent astonishing rises in valuation are simply caused by a lack of liquidity forcing up the price. When (or if) liquidity is restored, I suspect the valuation will come down, perhaps as fast as it went up.

Because all that volume came from Chinese exchanges which didn't charge trading fees : https://www.coindesk.com/bitcoins-volume-continuing-decline-major-exchanges/.  

 

You'll see there's zero volume from China now as bitcoin trading is now banned there. 

yes, China for sure. I dont really see the liquidity problem, but Im not in the US using coinbase I guess

China-based exchanges stopped offering margin lending and also stopped 'no-fee' trading. Coin Desk is reporting that the Lightning Network is almost ready, something that could improve liquidity https://www.coindesk.com/lightning-last-test-shows-bitcoin-scaling-solution-almost-ready/ 
A far more pressing issue; CME Group are releasing bitcoin futures tomorrow. No one is really sure what effect being able to short bitcoin's price will have on its value.