Of course they knew about huge volatility. BUT, Bitcoin was being advertised to institutions as now more stable, DIGITAL GOLD, INFLATION HEDGE, and that the huge crashes were a thing of the past.
That narrative is now dead. It would take a very long time for institutional money to trust Bitcoin as being stable again...
I don't recall anyone ever advertising Bitcoin as a stable currency, and institutions/companies would've absolutely known this. In fact, I actually suspect this is why some of them got involved in the first place. El Salvador for example, likely got involved anticipating a upward trend, so they can better their country very quickly. Obviously, at the moment the opposite has happened, but if they were to hold on long enough to see x2/x3 their money, they could really launch their country, quicker than they would be able to elsewhere.
They'll be back, but the volatility has always been a issue for companies to start accepting Bitcoin. It's why the likes of Steam, Wikipedia and various other companies pulled out after a certain period. This isn't anything new at all.