Rather than I market failure, I think this is a clever design. All users will not follow suit like you suggest, some will value liquidity over returns, and visa versa. This aspect ensures that, around 90% of Steem will remain Powered Up, moving forward. This protects the Steem Economy from a Dump Culture that we see so much in other Cryptocurrencies.
Steem Dollars do not count as Steem..
RE: The Push and Pull Effect of Steem Power Incentives - Why the % of Steem held in Steem Power will tend to 90%