See Their's Law, good money drives out bad.[0] People will hodl Bitcoin and spend fiat, driving up the price of BTC in terms of fiat until it absorbs some significant portion of global currency value. There are only 21 M coins; a deflationary crypto currency isn't for buying coffee or micro-payments.
It is displaying similar qualities to Gold in countries where governments have debased the currency.
[0] http://nakamotoinstitute.org/mempool/speculative-attack/