Except that's not what he did.  If the dollar price grows, it takes more dollars to proportionally move the market.  That's a fact of mathematics, not a logical error.

It also very clearly answers your original post.  Bitcoin *can* handle more money.  As more people realize the usefulness of the protocol, more people will utilize it.  In order for that added value to go into the system, since the supply is fixed, the price must rise.  It's a very easy to understand feedback loop.  The more valuable it is, the more people use it, and the higher the price goes.

Fixed supply + increased demand = higher price

It's really that simple.  Derivatives are not a way to increase liquidity.  The price already accounts for that.  If somebody *really* wants to sell, then they will be willing to take a slight hit in order to do so, which means they will sell for less than market price, which will simultaneously drive the price down as well as meet their liquidity demands.

Derivatives are players outside the market making outside bets with other outside actors about the market.  That has nothing to do with Bitcoin or its liquidity, although it might impact it substantially if the derivatives market balloons like derivatives markets always seem to do...  Derivatives en masse are one of the core problems with modern finance and banking.  They *must* necessarily cause collapse.  Because they don't actually bring value to the system.  So when one side has to pay the other -- well that value doesn't actually exist, so the REAL economy of value gets shaken up.  Obviously a real economy of sound money will survive that disturbance, since with sound money you can't just print more to pay the debt, so the debtor just has to default -- but the economy still suffers a quake, due entirely to pointless valueless speculation.