the problem is that most people don't have any contingency plan, they get used to a routine and never think about anything else. this is mostly the problem in developed countries. studies show majority of Americans don't even have any money saved up!
so to answer your question, most people used it for their primary needs instead of thinking about investing it. and a one time thousand bucks isn't really that much money to begin with for people like that.

i don't think so. bitcoin was bearish for nearly 2 years, you can't expect the bear market to extend indefinitely. at some point it has to come to an end. and it was ended before the pandemic even began and the massive growth was there preventing it from going any other way than bullish.