If the current situation persists for too long, then I believe yes... Bitcoin will be damaged, and the small Bitcoin holders will get out of the boat first, not before paying a premium for their transaction fee to fiat, of course.
Due to lack of regulations, many potential investors are shying away from the cryptocurrency. There exist very few bitcoin holders and bitcoin in circulation as of now but with time bitcoin might replace paper money and plastic money. Thus, only time will reveal the future of bitcoin markets.