That's right. To state it clearly, there will be an arbitrage opportunity. Buy BTC, transfer into SC, sell SCBTC, buy BTC. So the price of bitcoin will be lifted with the added value sidechains bring. In this sense inca, the child chain can never "destroy" Bitcoin even if it ends up carrying 99.9% of the transactions.
Markets and their capitalizations are a funny thing. They are illusory. We talk about bitcoin's current cap as being the price of a single coin multiplied by all the coins in existence. But the reality is far from that as the price is manipulated from, say, 1166 to 350 by a fraction of a few % of the coins in existence, or relatively modest amounts of fiat currency (millions to tens of millions of dollars only) on the way up.
This concept of a 'two way peg' between bitcoin blockchain and side chain is really an exchange. The terms of how many SCBTC can be acquired/released by locking/unlocking actual BTC are flexible and could float, for example based upon fiat exchange value of SCBTC or BTC. If SCBTC use becomes prevalent then it is possible that as the value of BTC falls, SCBTC rises, until BTC is not a store of value.
What you say (emboldened) is probably accurate. But what we care about is bitcoin maintaining value, as it's algorithmic scarcity was designed to do. That is the reason we hold it!