The risk ... is that even if BTC became worth $50 each ... only 1-2% of the holders of BTC would be able to cash it out and get anything.
What you say is correct, but it misses the point. The value of Bitcoin is not to enable 100% of investors to profit from a rise in the exchange rate.
But you
need that rise in the exchange rate to enable the other uses of Bitcoin. If the average person has 100 bitcoins, and a pizza costs 100 bitcoins, then the Bitcoin market is fairly useless as each person can only afford one pizza, and people won't buy pizzas.
The exchange rate needs backing value to be real.
What happens if I order a pizza, and on the way to go pay and pick it up, POOF, the cost of my pizza just rose 1000 times and the value of my entire last 2 weeks paycheck just fell by 99.9% because 1% of the market decided to "cash in".
That would be the cost of volatility, and is antithetical to the interests of BTC being adopted. I would not be surprised if one or two people own 50% of all the BTC out there. It would be a far different scenario if everybody out there delivered $1 in goods or services in exchange for the BTC they have, versus people holding onto them purely for the sake of getting something for nothing.