Deflationary Ethereum seems anti-innovation. Am I misunderstanding something?

My understanding of the merge is that it means Ethereum will become a deflationary token.

I can understand that this is good for speculators, but doesn't that defeat the technical purpose of ETH? What I found so attractive about Ethereum in the first place was the EVM and the interesting projects that it enables. Once the token becomes deflationary, why would people want to burn their deflationary ETH to execute code?

Computing power (and technology as a whole) is inherently inflationary. I could spend $100 on hardware today that cost $1000 a few decades ago. One of the many drivers of computational advancement is enabling new use-cases that were too expensive/impractical in the past. If the value of old hardware was higher than new hardware, there'd be no reason to develop new technologies.

While a drop in gas fees (as a result of everything in the future that the merge will enable) might help in short-term to offset this trend, ultimately it will reach a new equilibrium. At that time, I think EVM users will have to balance the opportunity cost of executing their code vs just trading their ETH. As value of ETH increases, the value of their code's execution will need to increase accordingly for them to want to run it. The only people who'd want to burn their ETH would be those making a lot of money, and smaller innovators would just use a different token.

This seems like a sacrifice of technology which generates value for the sake of speculation which does not. Am I misunderstanding this?