Austrians are fine with price deflation, but not monetary deflation:
"If a man has been hurt by being run over by an automobile, it is no remedy to let the car go back over him in the opposition direction." -- Ludwig von Mises (http://mises.org/mmmp/mmmp5.asp)
Just to clarify, Austrians define monetary deflation as a contraction in the total supply of a given money. In this case, it would mean a decrease in the total number of Bitcoins.
Supply contraction won't happen in Bitcoin until sometime before 2140, when the number of coins lost to hard drive crashes or which are otherwise difficult to spend start to outrun new coins minted.
"If a man has been hurt by being run over by an automobile, it is no remedy to let the car go back over him in the opposition direction." -- Ludwig von Mises (http://mises.org/mmmp/mmmp5.asp)