The limitation of BTC to 21M tokens reduces the utility of the token.
I totally agree with this assessment; the difference is my conclusion is that this is a feature and not a bug of the protocol. Printing inflation is a risk, and thus printing zero Bitcoin has the least risk and consequently the least reward. The utility is it provides a stable base for every other cryptocurrency out there to experiment and take risks that a bedrock token should not be making.
On a fundamental level your assessment assumes that cryptocurrencies are in competition with each other, which is in line with the tribalism and greed that we see within the ecosystem. Fortunately for everyone these opinions and projected zero-sum games are absurd from a perspective of open-source opt-in governance structures. Any crypto with a niche that provides a useful service is beneficial to every other crypto. This includes Bitcoin, as Bitcoin is very useful for what it does (not what people way it does; what it actually does).