confidence in Bitcoin is gone.
My confidence is bitcoin seems fairly grounded and rational to me.
Despite the failure of both Mt Gox and Flexcoin, the bitcoin exchange rate right now is still $670 according to coinbase, which is what it was yesterday. It's as if the currency is more resilient than the sometimes flawed implementation of a few exchanges, and it doesn't seem as if slashdot skepticism is moving the exchange rate either.
The Flexcoin issue doesn't seem hard to fix on other exchanges. How hard would it be for another exchange to use a smaller hot wallet? Or to insure the maximum size of their hot wallet?
Sites like flexcoin and Mt Gox are some of the early pioneers of probably the biggest innovation in currency in the history of currency. You'd expect some issues.
Here are the stats on the US-only bank robberies in 2011:
The sum total was $38M. Did these robberies decimate the value of the US dollar? Of course not.
When the credit default swaps started melting down, that's because all the banks were trying to insure each other in a giant interconnected circle jerk. That illustrated a huge, late flaw in the US banking system, and it hurt the US dollar. When bitcoin exchanges start trying to insure each other well beyond their actual ability to, then it'll be time to worry.
In the meantime, this is looking a lot like natural selection against bad implementations, not against the currency's fundamentals.