The government cannot take your money unless they break into your house and take your trezor, or jack your computer. And I'm sure that if they don't have a compelling reason, your protected by law.
to be more specific they don't have a right to control bitcoin cause it is not regulated nor generated by them but is something private and attained through (proof of work) i.e spending electricity.
Nothing can be judged about the future but at present it is definitely not dead.
They can have the right to regulate bitcoin is it is treated as a currency or a property. The governments will extract some tax out of it.
They have just missed the boat so there is no way for them anymore to make money.
No that is not the reason if people will have faith in bitcoin then they will buy at any price they see as they know that bitcoin will be holding much higher price in bitcoin.