Over 700,000 imaginary bitcoins just went up in smoke.

Mtgox was artificially increasing the supply of bitcoin, thereby driving the price down, just like a fractional reserve banking system.

This means that the "supply" of bitcoin has just shrunk by 700,000, which is like over 4% of total bitcoins. This means each real bitcoin remaining is now more rare and thus valuable.

Each person who got burnt by mtgox, will now have to start buying more bitcoin if they want to get back in the game, thereby increasing the price of bitcoin further.

An important question: of all the people who got burnt by gox, how many will stay in the bitcoin game and buy more, and how many will quite bitcoin all together?

Okay, yes it stinks that many people got burnt. However, I noticed for many months that bitcoins were selling for $150 plus on mtgox than all other exchanges. This is a major red flag! Why didn't people start ringing the alarm bells? Why on Earth would people buy coins on gox for 150 more than the true market value? Standard answer told to me: because no one can withdraw fiat from gox. Red flag! Something is truly rotten if all these people are forced to pay 150 extra per bitcoin, like holding your customers hostage, yet people still continued trading with kidnappers for months on end like nothing is wrong. Stockholm syndrome. Insane. Or maybe blinded by greed.