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?
I don't think we will have a situation when Bitcoin transaction fees will only be affordable for large institutions and not for individuals. If that becomes the case, then we might demand for fork to increase the block size.
Network is centralized at some point because centralized exchanges hold the most reserves and have the highest trading volume and secondly, China and the USA own the most mining hash rate. So, bitcoin is centralized at some point.
There were point in time when the transaction fees have subside already and so we can say that average joe traders and investors are very happy and everyone is back. But now in the last couple of days, the fees has someone increase again and thanks to Runes and the timing of it's released.
Nevertheless, for me this is just another temporary hiccups to all of us and we should bear with it. This won't last long as we have seen last year and then gradually back to like 6-10 sat/vB (in my view this is bearable to most Bitcoin enthusiast).