This is the fear of any cryptocurrency, even bitcoin. Cryptocurrency itself, especially on PoW consensus, cannot be banned because it is decentralized and there is no single command center. Most crypto users primarily associate cryptocurrency with the price on the exchange, and if this price collapses by 90%, many will consider the coin dead.
In this regard, those who became early investors in Monero are at an advantage, as they are not strongly tied to the value of the coin itself, because the cost of their coins is extremely low.
Most people are into crypto because of the money. Not because they believe in its tech. Monero may have some value today, but it could all fade away once it gets "banned" from CEXs. Only the underground world will use Monero no matter what. The rest of the people will stay with transparent crypto coins such as Bitcoin and Ethereum, especially when they "have nothing to hide".
You can see there aren't as much privacy-oriented coins today like it used to be in the early days. Developers are afraid of launching new coins with privacy features due to tighter regulations. These days, coins are fully transparent with PoS as their main consensus algorithm. It's a pity because this makes the crypto industry centralized. There's nothing we can do, other than sit back and wait what happens in the long run. I'd be surprised if Monero is still trading across centralized exchanges within a decade from now. Just my thoughts
I believe it is indeed a serious issue that most people are leaning towards transparent coins like Bitcoin and Ethereum. Your observation about Monero potentially getting sidelined is astute. It is hard to use, and that is a significant deterrent for many.
Think about this: What if the "nothing to hide" mentality changes? Societal perspectives are ever-evolving. People might swing back to valuing their privacy more, and then, coins like Monero could see a resurgence.
However, I agree that, for now, the trend is towards transparency, and the regulatory environment is adding to that momentum. The future of Monero and similar coins looks uncertain in the centralized exchange ecosystem, and its really a wait-and-watch situation as you rightly put it. Thanks for adding to the wisdom of the crypto community with your thoughts!