Markets and merchants do not care about the cost
I don't think that's true. The most important goal of any business is to minimize its cost. When your cost is low, you can make more profit by selling at the same price you used to sell. And I'm talking about every economical business here, not only bitcoin. Costings, transaction fees everything counts. And as the price of the Bitcoin goes down, transaction fees needed to go down as well. And when the transaction fees are low, I believe there will be more transactions than before.