I assume you mean a free market doesn't exist today.  I would agree although
a quasi-free market does exist, and Bitcoin exists in it.

But I need no reason to assume that the more free the market gets, the less people would use Bitcoin.  Just the opposite. 

You do have a point that something like Gold is more attractive because it has uses other than a medium of exchange.  However, it not not easily divisible, transferable, or portable like Bitcoin.