Bitcoin is used my a lot of people for gambling (for some countries that banned gambling) and buying things from a black market in the internet. That makes the goverment thinks that bitcoin is only used for doing illegal things and then they banned it for that.

And it's harder for the goverment to track the transaction of people. People could buy illegal things and they didn't know it, hence creating the idea to just ban bitcoin and force them to use fiat since it's easier to keep track of people.