My question is: How will BTC price increase in value if people are buying it as a store of value (as opposed to using it on regular transactions?)
If anything, people buying bitcoin as a SoV is actually better in terms of price increase because it takes coins out of the markets. In contrast to using BTC for payments whereas with most payment processors, the BTC is automatically sold for fiat the moment the transaction confirms.And why are Kuwaiti's buying BTC when our currency is the top in the world? It just makes no sense to me 
Because no matter how good/bad your currency is, it's still in the firm grasp of your government and can be inflated at will.