Nope. You're assuming multiple cycles. For a single cycle of high supply due to overpriced HBD which then results in a surge of conversions at a low price until the oversupply is resolved, it can not be higher than 10% (and in practice will be lower).

This is really trivial, and I'm not sure why you are arguing it. Any time the haircut is invoked, the added supply is completely capped at 10% (but in practice is lower since at least some supply was consumed creating the HBD, albeit what could be a much smaller amount at much higher prices). Only by cycling in and out of haircut could that ever not be true.

If you assume the price goes up and down wildly on a regular basis but never makes any sustained progress higher, then yes it could be infinite. In practice there have not been so many swings, I'm not convinced there ever would be, and I'm not particularly interested in what happens if there is never sustained progress higher. It just means we all made a bad investment.