Your model is not considering risk; the time value of bitcoin is risk-free positive, whereas any other instrument (in fiat) is either low risk break even, after inflation, or risk positive.

Assuming people are rational actors, they would spend as little as possible and hoard the rest.

So then we need to ask: "how is holding bitcoin different than investing in a similar mutual fund".

Holding bitcoin decreases the money supply driving up value artificially, whereas investing in a mutual fund increases the money supply available for investment and drives economic growth.