My point, is that all of my friends who have lost money as Celsius and/or Gemini locks up, are going to become distrusting of Bitcoin and cryptocoins in general.

You had your best shot at converting them last year, when they were ignorant, and hadn't lost $10,000+ on it yet. Today, they're going to be mad at their losses, the lies, and the fraud, and the outright stealing / locking of accounts.

The people in category #2 are almost certainly, permanently, lost. You can't just play with people's savings like this and expect them to trust you.

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This isn't like a "normal cryptocoin crash". Celsius, and now Gemini, account holders are unable to withdraw funds. Who knows how far this financial-contagion will spread?

What's going on right now is a fundamental loss-of-trust.

The price goes up, the price goes down. That's not the important bit. Locking down accounts and destroying goodwill is the problem with this crash.