It's a decentralized market pegged asset, if the asset you traded for HERTZ collapsed more than 67% then you'll have benefited regardless of say buying at the top and selling at the bottom. Whilst bitUSD would have been a more stable option, there is a limited supply of bitUSD where as there would be overwhelming sell pressure at the peak ($1.50) so you could potentially move far greater amounts of External_Token into HERTZ at the peak than you could do with bitUSD.
If you buy a market pegged asset (such as HERTZ or bitUSD), you have the option to 'settle' which calls the least collateralized position (liquidating their position) in order to fulfill your request to convert HERTZ to BTS at the rate of $1.50/HERTZ. They have no say in the matter (aside from settling themselves or improving their collateral to not be the least collateralized position being liquidated), so there shouldn't be a problem with liquidity exiting (settling, not selling) the HERTZ token. With BSIP-0018 on the way, we're going to see reduced risk (or partial/complete mitigation) of global settlement (black swan events) which will further stabilize this peak price settlement.
At the same time that people are settling at the top, many will be borrowing the token into existence and trying to sell at the peak - this will provide a large amount of liquidity. If they sell at the peak, then their debt will decrease (their collateral ratio will improve) and they will be able to settle at a lower rate.
Why would anyone sell at the bottom? The bottom (trough - $0.50) will be the point of maximum buy pressure (since everyone wants that $1.00 profit) - enabling you to short HERTZ on a large scale (again possibly larger than bitUSD) given this moment of peak buy liquidity.
Why would anyone buy between $1.49 and $0.51? If you hold the token until it's higher than the value you bought at then you'll have made a safe profit by simply waiting and not having any risk. You'd only need to wait a few weeks (depending on the value to you bought at) for the HERTZ value to be greater than the value you bought at (as long as you didn't buy at the top).
Any other concerns/questions? :)