It's performance anxiety. You nailed it when you said he thinks he's bad at it. If you were just some one-time thing, he could go ahead and do it, be bad at it, and it would be of little consequence (except to his self-esteem, but, sexually speaking, that's already shot).
He cares about you too much to have bad sex with you. It's sort of flattering. But you've got to get--from where he stands, he's completely trapped. Either you'll leave him because there's no sex, or you'll leave him because the sex is bad. Either, way he fails to satisfy you (and therefore IS a failure).
This explains the effort to put it on you with the whole "you're dysfunctional" thing, which is bogus on its face. If he can get you fixated on working on yourself about something, maybe you'll get on his no-sex page, and then the whole issue can go away and you can live the rest of your lives together in blissful celibacy.
Not that he's consciously thinking these things. I think this is going on deep in the back of his head somewhere.
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