You may be referring to Gresham's Law. When there are two kinds of currency which are required by law to be honored at the same value people will prefer to spend the one that is perceived as inferior. Just like I spend a wrinkled old dollar bill first, people would spend a coin that had been clipped or sweated before a mint coin. When coins containing precious metals were replaced with coins made of base metal, but by law they had the same value, people hoarded the old coins.

This does not occur if the relative price of the two currencies is allowed to float. Old silver coins are now worth more than their face value, and people do sell them. People may expect their bitcoin holdings to rise in value relative to other currencies because of the capped future supply, giving them reason to hold them. But if most people feel that way, it will drive the price of bitcoin up, giving people a reason to spend bitcoin. This is no bigger a problem for bitcoin than it is for any other commodity: classic cars, Picasso paintings, gold. The advantage of bitcoin over old Corvettes is that it is (practically) infinitely divisible.