I know, people still could hold bitcoin regardless and stay under the radar assuming they know what they're doing(with them not messing up their privacy), but this is probably when fear will be at it's peak.
I think that if the government really wants to get you, they will find a way. Take the almost 70.000 BTC that were seized from the hacker Individual X a few days ago. It took years, but they did it. He used tumblers/mixers but was still caught in the end.
If there was suddenly some critical vulnerability discovered which allowed someone to DDOS the entire network and prevent all transactions, all honest users would accept a fork to fix it very quickly.
I am sure they would, and why wouldn't they? But the emphasis is on how quickly would it be fixed and be ready to be deployed. In the mealtime, the value would drop. Not to 0 or anywhere close. We have seen huge drops recently. I think 30-40% in a day during the first wave of the COVID-19 pandemic.