would the Government of the Nations adopt BTC, a decentralized form of digital currency?
Some nations are already inclined to adopt Bitcoin, some maybe take BTC officially as legal tender while other nations accept it as mode of payment. So the question to the question is yes, government will adopt Bitcoin if they find it useful or beneficial for the country's development.
If they do, dont you think we should raise eyebrows and be suspicious of what they could be up to?
No, I think it is normal for governments to accept Bitcoin and other technology once they understood it or implemented regulation that can prevent exploits and negative stuffs.
how would it affect the crypto market and individual traders?
Just look at the picture, in a free market, if there is more demand with a fix supply, the price of the item will definitely surge. So first hand, the price of Bitcoin will surely incerease. Traders will have a great time raking profit and individual traders will have a more secure asset to trade because Bitcoin liquidity will strengthen. Aside from that with approval of the government, many people will be encouraged to engage in Bitcoin market thus making it more livelier than before.