I have seen this show before. In 1980 Davis, CA had well over 90% of trips being taken by bike or foot. The city (at that time pop 50,000) decided to go with anti-sprawl policies and densify, including forcing grocery stores into every neighborhood. The result was a city that consisted of a maze of areas of high car density. Not surprisingly, a decade later use of bikes had declined precipitously. High density means high car density which means high danger to cyclists. Since most of the people who were using bikes also owned cars, they just switched over to the safer mode. By 1990, the bike had all but disappeared from Davis.

If your city is going to densify, you need to get a city plan that includes large, open buffer spaces or you will just have building and road everywhere. Also, you need to have commitments to make the entire area accessible by bike but not necessarily by car. If you don't get that, you will find that densification will REDUCE bike use. People ride where it is safe and pleasant, not where masses of cars assault them.