There will be a fixed number if Bitcoins, and people, because of human error, will accidentally lose Bitcoins every now and then.
This must mean that Bitcoin will eventually seize to exist? Or at least shrink to minimal amounts, when it shrinks to a certain level, it will no longer be useful.
Is this correct?
Yes there will be less and less Bitcoins, but it is almost impossible to say that will cease to exist. That would be an really unlucky event.
Dont be silly to think every about its happening, I know bitcoin has good value in market and since long it is there no other coin ever had such value as bitcoin has, it is improving now a day in price, still so many people are there in the market who ask only for bitcoin, so it shows bitcoin has bright future that never gona let bitcoin disappear from market.
You seems to not understand not what I wrote nor what OP wrote. OP was writing that since there is 21 million possible BTC people can lose them and eventually we end up with none. I posted that that will most likely not happened.