The way I see it, a retail investor or institutional money would likely choose the real thing (settled in kind) over paper stuff that eventually goes bust. Ease of physical delivery is the winning property.
Sadly as it stands I think it's the opposite.
They're used to paper. Everything they do is built around it. The futures are provided by names they trust, unlike the physical options. Like most people here they're only after more dollars but at least they're happy to admit it.
They'll have to be dragged into thinking physical is to their benefit. It's alien to how they operate.
There would need to be an army of non traditional finance believers and players to take command of the price via physical options for them to pay attention.
Is that not the same for BTC ?
Most ppl are after more dollars. When the $$ price of BTC falls it is bad news for them. They are treating BTC like a stock/commodity, and most have an intention to sell (usually only a portion) for fiat.
That makes a lot of intended sales hanging over the market. This could be a very long bear market. I would guess the price needs to get low enough so that every potential seller has actually sold (fear) or is going to hodl (to 0 if needed) because the value of their holding is not enough to be worried about.
Simple Trading Psychology.