You sound confused.
There is a difference between doing all those things (restrictions, surveillance, censorship, etc.) to bitcoin and doing all of it to a centralized service using bitcoin.
For example they can force you to go through KYC when you use a centralized exchange and they can order that exchange to freeze your coins. But you weren't using bitcoin, you were using a centralized service.
When you use bitcoin, nobody can freeze your coins. Nobody can prevent you from sending transactions from any address to any other address (ie. censorship resistance).
When the government impose all those restrictions, that is NOT bitcoin's failure. It is the society's failure for having a government that doesn't represent their interests...
No you are the one who is confused because all you did was make a perspective 1 post. You should read the whole post again slowly and probably more than once then you won't be confused any more.
Bitcoin should have been a revolutionary movement which means it should have had privacy all along. Instead bitcoin became hijacked by investors and ROI and digital gold and regulations and no privacy.
How exactly do you want to go about this though? Do you want Bitcoin to become like Monero as mentioned above? What are your criteria for judging whether a hijack is impossible or not? If the government blocks exchanges from listing coins, does this mean hijackable? What if people intentionally dump the coin to bring the price down?
I second that you should differentiate what happened on the blockchain and businesses using Bitcoin to make profits. If the government wants to manipulate the network they'll have to do more than just asking KYC when someone use Binance.
I already answered that in the OP. We need privacy. Privacy is the solution. Using defi instead of centralized exchanges doesn't change anything if we don't have privacy. There are now laws that says you can't use USDT or DAI or WBTC and many other coins and you have to do KYC on all defi transactions or you will be fined/prison. Without privacy they can see who is breaking their regulations by looking at the bitcoin ledger which has no privacy to protect us and they will just come and knock on your door and arrest you. It doesn't matter if you are using centralized or decentralized when there is no privacy.