This doesn't happen with regular cash because banks have the scale to absorb it and pass it on to their customers. Bitcoin doesn't yet; and even if it did, there's no real way to restrict it.
Just as an example, Bank of America has over $2 trillion in deposits. If any minimally significant portion of that amount goes missing, it's pretty easy to track just due to scale. There are policies in place that ensure any transaction above a certain size gets looked at. If there are too many large transactions in a day, that gets investigated too. In exchange for having these safeguards in place, the government is willing to guarantee these deposits in the form of FDIC insurance.
Banking regulation is a good thing, especially when you're talking about an anonymous currency where transactions can't be rolled back.
EDIT: Just wanted to add that while Bitcoin itself probably will never be a globally significant currency, some form of cryptocurrency is likely to obtain relevance. But some people are going to get burned along the way, and these are the risks that you need to accept if you want to dabble in what amounts to unregulated banking. The regulations exist for a reason.
What advantage will another currency have over Bitcoin, that will trump it's lack of branding? If Bitcoin (with first mover advantage and network effects) fails, wouldn't it be twice as hard for the next to start from scratch?
My uninformed intuition tells me it's more likely that there will be a Gold and a Silver - one better, one worse, each used for different things.
Bitcoin's complete lack of centralized trust and inherent deflation seem like they may become big problems over the long run. I get that the peer-to-peer nature of it is considered a strong point by many -- but it also exposes users to fraud with little recourse.
It's basically like carrying cash: you can walk around with $10,000 in your pocket, but if someone robs you and gets away, you're out $10,000. If someone steals your credit card, the bank has fraud protection measures in place that limit their losses, and they often can roll back transactions. Unless you impose a similarly regulated structure on top of Bitcoin (where banks are super-secure and won't transfer large amounts of BTC without an auditable authorization chain so people become personally liable for any fraud that may occur) you're not going to be able to solve these problems.
Deflation is a bigger issue, in my mind. The algorithmic scaling of Bitcoin basically ensures that it will either not be very much in demand at all, or it will become increasingly scarce relative to demand over time. This creates an incentive to buy and hold Bitcoin as its value has tended to go up over time. However, most of the modern economy is based on the assumption that money today is worth slightly more than money tomorrow. This creates pressure to spend or invest, rather than hold onto currency for any reason other than liquidity. If Bitcoin remains popular, it won't be because of its virtues as a currency.
Just as an example, Bank of America has over $2 trillion in deposits. If any minimally significant portion of that amount goes missing, it's pretty easy to track just due to scale. There are policies in place that ensure any transaction above a certain size gets looked at. If there are too many large transactions in a day, that gets investigated too. In exchange for having these safeguards in place, the government is willing to guarantee these deposits in the form of FDIC insurance.
Banking regulation is a good thing, especially when you're talking about an anonymous currency where transactions can't be rolled back.
EDIT: Just wanted to add that while Bitcoin itself probably will never be a globally significant currency, some form of cryptocurrency is likely to obtain relevance. But some people are going to get burned along the way, and these are the risks that you need to accept if you want to dabble in what amounts to unregulated banking. The regulations exist for a reason.