I'd expect privacy networks to be taken away from centralised exchanges to outcast them. They'll be used but won't have activity because ppl won't be able to get fiat from centralised exchanges if they've originated from privacy networks. When ppl realise they won't have private info in centralised exchanges how many are going to use privacy networks?
In near time Monero could increase trades but we don't know if ppl will feel safe using it if they're sending exchanged crypto to centralised exchanges when they want fiat.
This has already happened for the most part. A lot of centralized exchanges have removed/dropped XMR entirely, or for most jurisdictions. While it effects liquidity, it does signify its effectiveness when it comes to privacy.
To address the second part of your post, I think many are becoming more and more fearful of centralized exchanges...some are even becoming more and more fearful of storing excess dollars. Over time, less will use CEXs for fiat related transactions, more wil l use DEXs for on chain trades and P2Ps if they ever need to do a fiat trade.