Thanks for showing your work, it gives me something to think about, esp since it intersects with a related issue in my current mental model, which is that xmr is worth what btc would be worth if the government really wanted to destroy it; and so $btc - $xmr is its non-privacy premium.

The logic is something like:

1. xmr is as un-traceable as they claim it to be
2. because of this, organized crime and others on the wrong side of dominant powers would prefer to use it
3. ... except you still can't use crypto to buy stuff at scale, there is no circular economy, you have to turn it into fiat, and turning crypto into fiat at scale is still a centralized affair
4. therefore they can't realistically use xmr to meet their practical needs
5. therefore demand for xmr is relatively low, since it's impractical for the people who need it at scale and too hard for normies to obtain, plus most normies have no desire for it -- this feedback loop keeps xmr price low
6. meanwhile, btc is as non-private as they say, and anonymizing strategies are impractical at scale for similar reasons as above (e.g., fungibility issues in mixed coins)
7. therefore, tx and money movement related to non-sanctioned activities stays mostly in the domains where it has always been, and the amount leaking into btc is not threatening
8. the govt is happy and need not declare war on btc, it is the best avail practical option given the current world

Your argument is interesting in that it inverts some of this logic: basically, you take the low price of xmr as a sign that it's not fit for purpose, whereas I take it as a sign that it is, but that extra-technical issues get in the way. Now I'll need to think of how I might adjudicate between the two hypotheses.