Hey Brandon, good to see you blogging on here and look forward to seeing a logical voice from outside the echo chamber I fear most of us live in.

I don't have an economics background, so I am hesitant to respond, but I think there are a couple issues with your outlook of probable negative freeroll:

1. Digital currency isn't necessarily betting on a collapse of governments and existing fiat currencies. It has many other use cases than just medium of exchange (decentralized file storage, computing power lending, smart contracts, store of value, etc), but even as one it has a single better use case of transferring money across borders than individual country currencies. It doesn't need to become the only medium of exchange to grow, and doesn't need to replace the financial system within any individual country.
2. A global decentralized cryptocurrency with public transaction ledgers held everywhere is very resistant to government action. Digital goods are tough to control, global digital goods without a centralized point are near impossible.

I don't really know how to address your point about governments being unable to fund and sustain themselves being terrible for crypto, but I think it is probably inaccurate; also in this case, the value of our cryptocurrencies (while they would be worth more than fiat) might be the least of our concerns.