Practically, Bitcoin isn't isolated from the traditional banking system because its price is supported by USD bank liquidity making its trade as a speculative asset rather than a currency.
Wrong.
Bitcoin is a currency and in the sense of its trading volume it is like any other currency. What you said is like saying that "Yuan is supported by USD bank liquidity just because there is a USD/CNY pair in Forex market".
Satoshi Natamoto envisioned Bitcoin as an alternative to traditional fiat currencies. If Bitcoin had been trading on its core value proposition - the ability to be your own bank - then Bitcoin would have rallied with rising bank uncertainty
It is rising with increasing doubts about the reliability of the banking system. The reason why you aren't seeing it is because you think everything is summarized in bitcoin's price! Whereas the adoption is still increasing every day even if the manipulated market because of the deepening recession in US isn't showing it.