Is privacy good for Bitcoin?
In theory, yes. However, it's impossible to tell how governments and regulators will react. Plus, it's all largely moot if the majority of users are simply handing their funds and their personally identifiable information over to total strangers in the internet (KYC'd exchanges) to hold onto anyway. Some people just can't be helped.
I think that Bitcoin still doesn't have privacy built-in at protocol level exactly because a certain type of reaction from governments and regulators is expected.
And, sadly, I think that because of this we will never have privacy built-in... or we will have it only when something will change (greatly) in the ways the governments "see" the things.
Bitcoin's future seems to be ETF and KYC. I hope I'm wrong though.