Maybe these people are not really being rational, otherwise they could have shifted into bitcoin already and just focus on accumulating bitcoin and be their own bank, rather than putting more fiat in their account and let it sleep in the bank, and only to find out everything they hardly earned are no longer accessible.
Bitcoin is for the people, that's why its decentralized nature matters the most. But majority are still trusting centralized banks, and ignore about self-custody, when its our own money so we should have the full control on it, and not the banks having its full custody.
Some people are not fortunate enough to be exposed to Bitcoin just like us. They might not be aware that they can be their own bank since they are not exposed to information about Bitcoin. Bad situations like this would usually force people to begin to seek alternatives. Withdrawal restrictions by the Central Bank of my country led to massive adoption of Bitcoin. Maybe Paraguayans would begin to adopt crypto because of this bank failure.
This is why we should only deposit the amount that is covered by insurance. I won't risk my money for a meager yearly interest. This is also the problem of people trusting banks too much. Depositing more than the insurance promised is like playing with fire. It can easily burn us if bad things happen just like the situation @OP stated.
The National insurance of my country will not give more than 3,711.37 to bank account holders in case of bankruptcy. So anyone who has more than this amount in the bank should be ready for any uncertainty.
