For sure 100% people are still gonna be using it though in smaller scale. It's undeniable that majority of usage is always for investment though bitcoin is also good for payment.
If government somehow out of the blue announce to outlaw BTC, people will sell it and price plummets, but guess what, it won't be completely dead, I'd even say it's still gonna be frequently used, the blockchain would still have many transactions.
The biggest downside is just the price going down. But that's about it, we're used to bitcoin at sub 1k anyway. However, there's really slim chance bitcoin gonna be outlawed.
But is it really worth the risk? I mean, most people would be afraid of getting caught by the government. They could either face fines, jail time, or worse-case scenario, death. With market prices going all the way down the drain in an instant, almost no one would use BTC or altcoins. It's has always been about the money.
My guess is that once crypto is "banned" worldwide, BTC will lose investor appeal as a store of value. It will become a digital currency alternative to Fiat. Just like how Satoshi wanted Bitcoin to be used in the first place. At least, most governments are supporting crypto. So an outright "blanket ban" would only be a concern in the distant future. Just buy, "hodl", and forget about the rest.