When Bitcoin's fiat-denominated value drops, the claim that the price of everything actually increased while Bitcoin remains stable — becomes a clearly silly argument when you realize we can make the exact same argument for literally any other asset of your choice (which will in some cases yield completely contradictory conclusions about whether the price of everything else is going up, or down).
To make this argument, you are essentially axiomatically proclaiming that the value of X is fixed, and so when its value appears to drop relative to other things, this therefore is actually just a case of everything else getting more expensive.
The problem is you actually have to justify why you believe the value of X is fixed; otherwise, the conclusion is tautological. Without justification, you will find endless logical contradictions by applying the same logic simultaneously to multiple assets, yielding stark disagreement/contradiction on whether "everything else" went up or down in value, depending on which asset you chose as your denomination reference point :)