You are conflating the money with the system that governs it. Bitcoin is definitely not "more fungible than fiat" – cash is the king of fungibility. I don't mean to put you on the spot, but these are exactly the misconceptions I'm talking about.

Every cash bill has an identifier and can be tracked. No two have the same ID. They are regularly pulled in and replaced. Some are also marked, in other ways, to follow their movements. Bank money and credit is tracked through ledgers, so that is arguably more fungible, but highly traceable. What the latter has is a gigantic market, so that one could create a complex movement of the money, to obfuscate the origins. Gold is an element and can be made untraceable and unidentifiable through melting, stretching, stamping, or otherwise reforming.

And no money is separate from the system that governs it, as money loses its monetary premium outside of that system. It is the system, and the consensus governing and defining that system, that makes the money into money. Gold is not money, without coinage or a gold standard. Fiat is not money, without a chartered banking system. Bitcoin is not money, without the nodes.

Monero is much better at that. Better fungibility. Better neutrality. Perfect for enemies. Perfect for anybody. Bitcoin is non-fungible and everybody using it outside of KYC exchanges will sooner or later find out what "taint" means.