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?
No, I think those who lost bitcoins are making the value of BTC increase. because scarce things are always sought and wanted by people.
Bitcoin will take more than 100 years to exploit the rest, and you know, those who lose it will regret it in the next 10 years.