Capitalism has existed with governments manipulating the money. Capitalism has never existed in an environment with exclusively bitcoin backed transactions. Even gold/silver economies experienced manipulation of the currency.

Your argument would be similar to someone jumping in a tar pit and an observer telling others that humans can’t swim. Humans can’t swim in tar. They can swim in water.

Capitalism doesn’t work well with manipulated money. My thesis is that capitalism with perfect money will produce the most efficient economy that the world has ever seen. This doesn’t mean wealth distribution will be equal. That would be completely unnatural.