If it happens most people will go back to cash, this is the reality, but the real believers in crypto currencies will just go into the anon coins market and the demand will rise. The people who will use a blockchain from govt. will be people who never really heard about Bitcoin before. By the way, have you noticed that there are more and more people looking for anon coins such as Monero, Zencash...?
This is very possible. But keep in mind that at this point the number of real believers in crypto may be a lot smaller than the number of people who are buying and selling cryptos. I think that much of the price increase is due to people trying to make money, not because they know or care much about cryptos. Look at how bitcoin's price has behaved historically. Every spike during which the price increased by a large factor was followed by selloff of at least 75%, which means most people bailed when the price crashed. That should give you some idea as to how many people are in it for the money vs. how many are "true believers."
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