Some people actually do trust and have studied bitcoin and confirm that it's worth their investment, but anything that's not supported by the government, they consider to be very risky and don't want to get involved in it as they believe government policy can affect their investment, which is why some investors waited till the approval of ETF before they took the step of buying through ETF even as they don't hold custody of the coin; as long as they can count profit on their portfolio, they are okay with that.
It is natural and there are many people who are still not sure about investing in bitcoin for certain reasons like the ones you mentioned.
But they forget one thing and that is that bitcoin can be invested independently without the involvement of a third party and even if the government does not support it, it will never be affected.
But that is how some people see developments and without regulation or support from the government some people will not approach investment.
Even some people who live in countries that make policies that allow involvement in bitcoin investment are unable to see the best opportunities and they still fail to understand investments that are so far growing well like bitcoin.