3) Contrary to popular belief, spending Bitcoins does not make them more valuable or bolster their market price. In fact, the opposite is true, when you sell a Bitcoin in exchange for a good, you are expressing a preference of the latter over the former and increasing the supply of Bitcoin while decreasing the supply of goods. In other words, every time you sell a Bitcoin, whether for USD or a good or service, you are increasing the market supply of the coin and thus it's relative price will be slightly less. Consider the counter-factual: if nobody ever sold a Bitcoin for anything, it's price would rise to infinity. If your goal is to increase the BTC price, don't ever offer them in a transaction for anything.
You make a valid point, however imo this is a fallacy.
There is something as a middle ground of how much something to be supposed to serve as money can be hoarded and spend to give it its most value - as a percentage.
In the case of bitcoin a very vast majority is hoarded and even when transactions take place it is just so in order to be hoarded by someone else. Take the example of gold. There is and was always a significant percentage of it used for practical use, and/or barter and trade. Industry, ancient gold plating and so on.
What the actual percentage would have to be depends on the circumstances but from what I've read it should be 50% or at least some double figures. Trying to guess how many bitcoins are actually used as a currency makes me faint, it might be something like 0.0001%.
The effect is very high volatility because the only way to value it are the expectation of future value (which _have_ to be based upon it's later expected value as a currency at some point) and the costs to generate it.
If we had actual business transactions taking place not only would it buffer the decline a growing economy would actually boost it's value.
