I'm not sure if you're overestimating the power of the state or if I'm underestimating it. It's impossible to regulate Bitcoin to death, it's a global network.

For one, % hashrate of publicly traded corporations of the total network is increasing year over year and approaching >50%. It's trivial to regulate public corporations. For two, improvements to Bitcoin as p2p money are fundamentally stalled out. Covenants are going nowhere anytime soon. Lightning isn't a proper long term solution. It's good we have Monero in case those 2 lead to Bitcoin's failure. We all benefit from a stronger Monero too.