Money is a network and a protocol...networks are winner-take-all. That is the game theory.
Sure, but at the end of the day, people want dollars. Ironically, crypto - which we were told was going to kill the USD - has only served to reinforce its supremacy. That is true now more than ever with the rise of stablecoins, which - unlike Bitcoin - actually have a serious use case, and will be embraced by the U.S. government as a means for both generating steady demand for U.S. Treasuries and spreading the USD into foreign economies. Essentially, it is just another means of exporting U.S. debt, thereby extending the shelf life of the dollar.
Nation-states (especially global powers like the U.S. and China) play by different rules than normal market participants (who are just concerned about making money, versus nation-states which must account for a wide range of domestic and geostrategic economic, political and social considerations). China has already essentially banned Bitcoin, and is certainly no worse for having done so. The idea that China will suddenly "come to its senses" and start accumulating Bitcoin in an effort to beat the U.S. due to game theory is totally laughable. The Chinese are smart enough to understand that the real basis of wealth lies in productive industrial power, which is why they have utterly transformed their economy and society in just a few decades. They have no need for Bitcoin, and if they don't, no one else does either. Bitcoin is a sideshow.
Plenty of videos where guys like Kyle Bass and Jim Rickards explain in depth how the Chinese economy is quietly imploding and how they can only paper over the cracks for so long. Communism doesn't work long term. Banning Bitcoin does little to stop its usage. There are plenty of Chinese who find ways around the restrictions and continue to buy Bitcoin. And even if China doesn't accumulate Bitcoin (the Chinese government already has a reserve of seized Bitcoin) it doesn't matter because USA, Russia, the Arab countries, Singapore and some EU countries and Latin American countries will all accumulate Bitcoin and leave China in the dust.
As for the part I have bolded in your paragraph China inflated a massive real estate bubble to prop up their GDP and now the air is quickly deflating from the real estate bubble the economy is rapidly cooling down. China is Japan 2.0. Not just real estate but China in general had a fixed asset investment bubble too many empty bullet trains to minor cities and large empty highways in minor cities, etc were built just to prop up GDP. The quality of GDP in China is very poor and malinvestment is rampant due to a lot of things being done just to create employment. China has spent decades making bad decisions and now the chickens are coming home to roost. And I haven't even mentioned the demographic cliff in China. China's population could more than halve within the next 100 years, dropping from around 1.4 billion to potentially 525 million by 2100.