Maybe it's the fact that the fraction of people who would have had those coins are no longer participating in the market as sellers that really influences that supply vs. demand equation.
Correct. Less accessible Bitcoins lead to a lower market supply. Estimates go up to a few million Bitcoins that have been lost, such as this hard drive holding
7500 Bitcoin. If he wouldn't have lost it, he would for sure have sold at least part of it by now, to live a life in luxory.