On the one hand, as their Bitcoin holdings increase, on the other hand, their wealth will also increase.
I agree with all of the points of your post, including this one, except you could have worded this part better, since you are suggesting that holding more bitcoin is going to guarantee increased wealth, which truly is not true. There is no guarantee, including that if someone does all the right things in bitcoin including investing into it as aggressively as he can, without over doing it, and he still might end up in a worse situation than if he had not invested into bitcoin... so surely it is better NOT to consider your bitcoin investment as if it were guaranteed, including communicating to others in a way that suggests that either you believe it is guaranteed or that it is guaranteed - since also you could lose your credibility when you communicate like that... even though many of us likely recognize and appreciate that it is better to invest into bitcoin rather than not investing into bitcoin, especially if we have figured out that we have discretionary income. The devil is also in the details in regards to either how much or how to go about such investing into bitcoin.
Right. It will happen with those people who made investment from only with the hype when the greed level is high.
If investors weren't aware at least with the basic knowledge then they will definitely face loss even they intend to investment in bitcoin. for example if a person invested in bitcoin at the 2021 at 69k then how will he make profit, he takes 4 years to recover even if he made the investment for the long-term. Here is memes for those-