Your steps 1–8 capture my thought processes identically and in order.
But you left out step 9 and 10, which I think you also skip over in discussing a possible economic collapse.
Step 9, is: whoa, transaction fees and times are both so huge now that I cannot use bitcoin for anything, and worse, I may not even be able to spend various coins I have now, so no, I have to shift out of bitcoin because it’s fundamental use as *currency* is subject to being destroyed, and it looks like it is going that way.
Step 10, is: whoa!! if bitcoin loses an ability to be used as currency, and the “public” get wind of it, then any 8 year long record of being used as a store of value is out the window and bitcoin could wilt and fall like a tulip in July.
When I first got some bitcoins, as test to see how it was used, I sent off a buck here and a buck there to some other wallets.
With transaction costs at 40 cents and backlogs of days, I don’t know how I spend that.
I don’t know how I buy coffee with bitcoin or go to a restaurant or anyplace to buy with bitcoin, and with backlogs of days and not seconds, I don’t understand how or why a business owner would take bitcoin.
At the moment, proposing to a business owner to buy their coffee, meal, car, or anything with bitcoin is a bit of a Wimpy strategy: “I’ll gladly pay you Tuesday for a hamburger today”.
At the current time, I am enjoying seeing bitcoin run up in price, still, near as I can tell, for my uses at least, both in terms of currency and long term storage of value, bitcoin is dead. So in that sense, the economic case for bitcoin is already gone, and the collapse is occurring, it is slow, and might sill be reversed, but it is happening.