[someguyorother]

I think it comes down to convenience.

Paying in bitcoin is significantly more of a hassle than paying with a card, and it has much less recourse for a buyer that isn't careful (e.g. no chargebacks). Thus few people use bitcoin just as a means of exchange unless they have some specific reason for doing so that outweighs the inconvenience.

You thus end up with a fairly heavy concentration of criminals, fans of the ideology (libertarians and goldbugs), and very privacy-minded people. Of these three categories, the former draws a lot more attention than the other two, and thus bitcoin becomes associated with crime.

Physical currency is still convenient, and the state can go after fraudsters and thieves, so there's more recourse as well. In addition, it's the original form of money, so it has an established user base (so to speak) who aren't criminals. A closer analog to bitcoin would be very large denomination bills, which are both risky to carry and has little wider use; and, indeed, the EU is retiring its 500 euro note on suspicion it's mainly used by criminals.