Bitcoin will recover, but right now it is going through a liquidity crisis: Only a small percentage of BTC users were using Tradehill, a competitive BTC exchan

Bitcoin will recover, but right now it is going through a liquidity crisis: Only a small percentage of BTC users were using Tradehill, a competitive BTC exchange. People have rushed to create accounts there, however it takes a few days to transfer money in, so right now there are more sellers than buyers, causing prices to go lower. In addition, apparently some people have their money tied up in unreachable MtGox accounts so are unable to trade. MtGox has some serious issues to deal with. Finally yesterday, on the 3rd day after the exchange was brought down, they instituted an account recovery page, where you can provide information about your account and try to prove it is yours. Their support people are manually reviewing account information and will give you access when they feel you have sufficiently verified the info. It looks very fishy, like MtGox is intentionally delaying access to people's accounts in order to prevent a run on the exchange. We don't know exactly how much money or coins were actually stolen from MtGox, but it is entirely possible that someone figured out a way to transfer a large amount of coins or real currency out of there. It might be possible that MtGox cannot make all investors whole again, so they are reenabling accounts just a few at a time and hoping that not everyone withdraws their funds at once. Personally, I never kept a balance of either USD or BTC in MtGox. Their site looked too amateur to trust with money. I would sell my coins and transfer them to Dwolla immediately. Right now, all of the exchanges look sketchy. I would not trust a single VPS running MySQL at all with what could be millions of dollars.