Not true in itself. Consider the stock market: it's value has been unstable for the past two decades, yet it is still one of America's most popular stores of value. Consider also gold and housing, two other popular stores of value that also have unstable pricing.
The erratic price does however prevent it from being a unit of account.
There is a speculative component in house prices, and this is a concern for anyone who is "storing value" in them, but there are fundamental uses for housing far beyond the fundamental uses for gold.
Equities have a value story too. The dividend on stocks represents a future earnings value which is tradable. Also Equities provide voting rights which have value.
Fiat currency has a value story; the states monopoly of violence provides it with the ability to collect tax from economic activity where that monopoly holds true. Tax revenues are a future income stream that has value; hence the underpinning of fiat.
Bitcoin has rarity and speculation only.
The point is, there's no analog to the digital nature of placing a conversion value based on the bits of a certain integer value stored in a distributed blockchain.
The latest round of blockchain technology is showing, bc is good for a lot more than currency. In fact, there are many things that BC can do much better even than it can be a currency.
My point is, I bet on the long-term value of bc technology, but actually not on the long term value of Bitcoin as a digital asset.
For example, very soon enough you will be able to cheaply, easily, and freely store your USD or whatever currency you want on a blockchain, and use it to spend and trade freely. Choose any blockchain and conversion rate / resolution you want and issue a legally binding IOU. Of course the trick is handling redemption!
For my education could you expand on your thoughts around "The point is, there's no analog to the digital nature of placing a conversion value based on the bits of a certain integer value stored in a distributed blockchain". I think that you are making an interesting point here but I haven't quite grasped it so am intrigued.
EDIT: This is distinct from various toy applications of the "you could do this with a blockchain..."
Therefore, speculating on the viability, power, and relevance of the state.
Or to the NPV of the future cash flow generated from renting it.
The implied point here (I think) is that bitcoin is a bad store of value because it has rarity and speculation only, not real value. This is incorrect though: consider the counterexample of gold. Gold is the oldest store of value around, but it really only has rarity and speculation going for it. Around 90% of the gold in the world is either sitting in a vault somewhere, or used as jewelry [1].
So for your implied point to be true, either (a) gold must be a bad store of value, or (b) there is something that distinguishes gold from bitcoin.
I am frightened of someone with a machine gun (or half a dozen mates with battle axes) and I would probably agree to share my farm produce with them in exchange for them not killing me and my family and for them preventing other people from killing me and my family.
This was the partially the origin of gold's value. The monopoly of production and distribution of gold and the tie to radical threatened violence. In addition gold is pretty and can be used in electronics, but these are minor components in its value. Mostly we retain the cultural memory of a time when digging up gold was done by slaves owned by folk who had a propensity to murder, and therefore having gold enabled the deployment of murder.
Bitcoin might have the same sort of association to value as gold once did if one day state actors decided that it was an appropriate proxy to violence. Non state actors are may also decide to use it that way - "honour your bitcoin debt or find a horses head on your pillow!" However, if they do/did then they would find that eventually state actors would step in and take over control. The problem for bitcoin is that it is not good as a fiat currency by design, so those that have the capability to do violence are unlikely to adopt it as a fiat currency in the long term.
It is not good because it is deflationary due to the finite supply of bitcoin and the increasing difficulty of finding new ones. This is a bit worse than the situation with gold because we might find a big load of new gold somewhere, while we know exactly how many bitcoins we might ever extract, and we can say more or less when we will get the last one.
This is bad news for contracts underpinned by violence, because it means that the longer the contract is the harder it will be to fulfil it, because the greater the demands on the supply of the items required to fulfil. Thus, if I sign up to take a loan from my bitcoin obsessed local feudal overlord to build a barn or other item enabling wealth creation then I will have to know that I will produce more wealth from it in the future than I could if I were to have it today. Otherwise the value of the contract to my lord will be negative, so he/she won't hand over the loan.
So bitcoin as a fiat currency will be a disincentive to wealth creation. Like gold eventually ended up being when the early mines got worked out and extraction got really hard.
This is not to say that crypto-currency might not be adopted by state actors, but it is to say that bitcoin won't be adopted by state actors or a functioning underground economy either. This means that it is a bit less good than gold as a store of value now, and a huge lot less good than gold as a store of value in the past. Gold is living on borrowed time as a value store, bitcoin has no time as a value store.