Currency and investment are two totally different use cases. People's intentions and behaviors with respect to them are totally different.

people don't buy things by paying for them with US stock index funds. They pay for them with the cash portion of their portfolio. I mean sure, at some point they convert parts of their stock portfolio to cash. the reason it matters whether it is currency or an investment is, if it is an investment, then it should be valued on principles we use for valuing other investments.

The only reason to hold off on purchases because you think your bitcoin will go up in value is because you think your bitcoin will go up in value.

But that applies just as well even if you don't already own the bitcoin (you could just buy bitcoin instead of the other thing). Why does anyone buy anything that's not bitcoin? Because they want those things more than they want bitcoin. That doesn't stop being true just because you can pay for things in bitcoin.

Identical reasoning applies if you replace "bitcoin" with anything else that you think is going to go up in value over time. And people still buy things. The sky isn't going to fall down!

It's not symmetric though. If I sell bitcoin to buy toothpaste, I will need to pay taxes and transaction costs, so I will probably just use cash to buy toothpaste, not bitcoin.