This theory makes sense, because most people are interested in Bitcoin solely for the sake of profit, and they are most interested when the price is rising. If the volatility disappeared, the game would change completely, but somehow it doesn't seem to me that it would be positive for Bitcoin in the sense that it would eventually become accepted as a means of payment by more merchants.
They can do this even today by using payment processors that allow them to completely avoid volatility because the customer pays in BTC and they receive FIAT in their bank account. Therefore, I think that from the side of merchants, volatility is not a problem, but the real problem is that globally less than 5% of people are somehow involved in cryptocurrencies, and a very limited percentage uses Bitcoin as a currency.
In other words, the user base is so small that it does not motivate merchants to even think about offering such a payment method.
Even people who are not here just for the profit, could end up not caring about it because they would be basically doing something that is lacking the thing that made it worth it. Like for example I am not here just for the profits, I like bitcoin because it is a great currency and I work in the crypto world, there would both be a situation where there are less work available so I would probably be unemployed, but it would also be something I would cash out directly instead of keeping it in bitcoin as well.
So, it is quite important to not mistake bitcoin with anything else, it would be a shame if it was ever a stable thing and lacked the volatility it has today.