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.
And you are saying this now where the price of Bitcoin is at it's strongest? Bitcoin as of right now is priced at 2790$ which is 900$ more since the price deep it had last 2 weeks ago. Could you even think of a stock in the NASDAQ who can grow that high frequently in a year? Of course not they are not as bolatile as Bitcoin or any cryptocurrency can be. Right now the confidence of Bitcojn holders are gaining momentum because of the decision they are having for August 1.