What will happen when only large institutions can afford to use Bitcoin's blockchain, due to rising fees? Won't this centralize the network if most can only trade bitcoin on centralized exchanges?
The fees will only go high as long there is demand for transactions and there is only demand for transactions as long as the profit of the transaction justifies the large fee. For example, when all that Bitcoin NFT (Ordinals) stuff started, those NFTs were selling for very large sums. So large, in fact, that it was worth congesting the network and paying them for the NFT minters. But that hype has calmed down and so have the fees.
Bitcoin as a store of value is well worth a 7 dollar per transaction fee. But the devs are working on updates, so I see a rosy and decentralized future for Bitcoin.