This is not bad in itself. It's just the first step in the market evolution. Given a free market (barriers aside) an equilibrium will be found sooner or later, but this step needs to happen first.
I wouldn't say 0 utility but for sure not anywhere near it is now.
Tulips still have "utility" today but a single one does not buy you a house anymore ;)
No one can guarantee it. There can always be a major breakthrough that breaks the fundamental assumptions on that bitcoin is build.
For example: Quantum computers getting a main stream thing and growing exponentially in power.