I've been gaming it out and I see no way for it to coexist as it is a direct adversary to the global central banking system we exist in. Crypto eventually causes a global run on the banks once we reach a tipping point where average people start demanding crypto over fiat. This triggers a derivatives explosion (1.3 quadrillion dollar market) the global financial system implodes and all fiat debts are erased. What is left is complete chaos all public services go unfunded, pensions evaporate, companies go under due to their fiat assets evaporating. A new order arises but who the fuck knows that that will look like, world war 3 style military actions begin.
I do see government intervention before it goes that far and it will be the draconian kind. They cannot coexist since crypto cannot be centrally controlled , regulated or tracked due to cross chain interactions which are undetectable. I only see one path for them and that is waging war on crypto public chains. Long jail time for hosting or participating, extradition and global cooperation since not cooperating might as well be a declaration of war.
I believe that this reset that you are talking about is going to come soon.
Fiat currency is simply not a sustainable way of managing an economy. In fact if you look at the history of money one single fiat currency has never survived for more than 100-150 years. And I beileve that we are heading to there right now.
The problem with fiat is that the government can take out loans from the central bank, which is basically a part of the government. They do this to print new money but makes it sound legit and all. Bitcoin isn't based on debt, it's based on assets. That's what i think makes bitcoin special to be honest. I believe bitcoin t obe a great long term investment, something to hold if you want to save up for the future.