I agree with you that bitcoin supply is not perfectly vertical, when we're discussing fiat prices, which is what I thought Den was doing. In that case, it should be the curve of how much bitcoin is available for purchase at each fiat price.

That's not how we usually talk about money supply, though, since the money we're usually talking about is also the unit of account and one of the uses of money is savings (so there's really no such thing as money on the sidelines). So, if we're talking about the bitcoin money supply, we have to include all of the bitcoin being used as money.

You could argue that the lost coins and dust are not currently being used as money. They might be a mechanism for bitcoin supply to be related to purchasing power.