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Google does a "new site bump" once your site is first indexed. This is done to allow people to see your new site and to get a sort of baseline measurement for your conversion rate. Otherwise, most new sites would start at the bottom, never get seen, and never increase in rank as a result. Typically this lasts a month or so, then your site will drop in the rankings and your traffic will decrease as you described.
If you aren't already, you should be using Webmaster Tools for both Google and Bing to, among other things, make sure that your pages are still indexed (meaning they haven't been removed for a violation of some sort). What you will usually see is the newbie bump, followed by a drop, followed by monthly (or so) bumps outside of your ordinary trend. These bumps are less pronounced than the initial one, but they serve the same purpose.
The good news is that if your site was performing so well during the initial phase, it should bubble up again naturally. The bad news is that it can take a few months.
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