At first consideration I can't see how money out of circulation can 'cause speculative boom and bust cycles'. Are you suggesting fear of hoarders dumping feeds busts? Surely if these nasty hoarders/long-term-speculators/savers selflessly did something with their coin so that they are in circulation, after the adjustment in price we'd be subject to the same cyclic upward and downward pressures - and we would be forever fearing someone new isn't going to come in and hoard loads (thus exposing us to the same supposed problems).
Can't we just accept it is going to go up and down quite drastically for some time because it is very small and someone with a reasonable amount of money can move the market quite significantly? That's just the way it is until 'market cap' is much much higher - and in order to get there the value has to rise - and due to human nature it IS NOT going to rise nice and smoothly to provide the ideal adoption-for-transactions circumstances you desire. It is simply what it is!
it is called a liquidity trap, which in btc's case diminishes the network effect thus lowering tx and overall network value.
anyway i am writing all this down to see if my analysis turns out wrong or right 3 to 6 months out and there is a reversal. if it is wrong then i have to rethink. if it turns out right then i'll feel good about getting it right.
Though not an economist I'm not convinced what you are describing is called a liquidity trap, nor can I see how a limited available amount of bitcoins in circulation diminishes the 'network effect'. Would you care to elaborate?
