That’s exactly what I’m wondering, if all the bitcoin is held as investment and not utilized as a currency, then there is no incentive to receive tips, so no incentive to crunch hashes, so how does it work then?

To maintain the current level of security then, all else being equal, the total fees collected will have to increase by the amount the subsidy decreases by. So each byte of block space will cost more for the person buying it. That could be an issue, but the solution to that problem is to extend the protocol to allow for more sophisticated "layer 2" systems so that the end-user experience has as small of a footprint as possible.

Ideally without compromising security, which can be done with zero-knowledge proofs and such. But it's unclear if the political will is there from the community around the Bitcoin project.