You are right. Some people believe Bitcoin is 100% anonymous just because you don't have to enter your name, residence, etc into the system to register and therefore believe that BTC is one of the best currencies for illegal activities, which is doubtful because every transaction is permanently recorded in the Blockchain and can be easily traced. One can always see the origins of every single transaction. So, you're right it doesn't seem to be perfectly anonymous.
As long as your identity never gets linked to your funds, you can't get caught. You are anonymous. Your bitcoin transactions are public.
Cash has its downsides for crime too. For example carrying suitcases full of cash is really obviously sketchy and the police might get suspicious. carrying a laptop computer or a cellphone is not.
Bitcoin funds may be tainted but so can real world funds and cash. In fact almost all US paper currency has traces of cocaine on it. (through touching contaminated bills I'm guessing).
Also cash has serial numbers, people forget about that. If somebody is really after you, bitcoin might actually provide advantages. One of them being that someone has to crack your very mind to steal them from you (if your security is high enough) and since polygraphs are bullshit, as long as you're enough of a badass you can deny that you have any funds or lie about the amount of the funds you have (have half in one private key and half in the other)
Or maybe set up your funds in a way that it's impossible for you to give them up unless a co-conspirator gets caught as well. Then if they kill you, the co-conspirator doesn't get the funds so they are incentivized to bail you out.
Edit: misspelled "you're" as your