The encryption for Bitcoin is easily broken by the government as it uses an algorithm provided by the NSA. This is shown by criminal seizures throughout the world. Shut down the exchanges and you've effectively shut down Bitcoin since as you've mentioned, Bitcoin is not really used as a currency. The decentralized nature is the only thing it has going for it however since most people don't have custody over their own bitcoins and world governments are setting up sophisticated mining operations it's possible they'll take over with a 51% attack. If that doesn't happen, everything is still traceable by design.

I feel like it's like the covid vaccine, not the end goal in and of itself but a way of getting people ready for more draconian measures. Ingratiate people to this digital money and they'll never turn against it.

But who knows, all I know is the media has been talking about Bitcoin since at least 2013 and from what I know the media stays quiet when they REALLY don't want the people to know about something