In 2019, Bitcoin's peak price was $12k and during some periods of went as low as ~$7k, since the bull run started, Bitcoin has not dumped below $29k, so they are the very least have been ×2 on their investment.

Only invest amounts you can afford to lose at points in time, regardless of what you're investing in. Each asset has its fair share of risks and every investor should factor in the possibility of losing their investments.
Dollar Cost Average is one good way to get into Bitcoin using controlled amounts you can afford at scheduled periods.

from the story, I feel that the risk of selling all assets and then exchanging them for bitcoin is a big risk. However, the method they use is successful, and has escaped a great risk, and has earned a well-deserved profit. All I can say is, the risk you take will be worth it if it works. it has been tried by several people who have had success.
The positive thing about it is that they really believe that this technology will really develop. it's just, I still suggest that use assets that you are prepared to lose for it.

What dump are we talking about now? Bitcoin is still above $40k,,, so if the family invested in 2019, then the maximum price they bought it for was less than 12000. So why are they panicking when they are almost 300% in the profit in this "dump"? And the rally is still very far from over right now

Madness, that isn't investing anymore, that's just a YOLO movement imo. Yes, they won that YOLO, but really, they're one in a million. There are probably a lot more people out there who went in to Bitcoin and then lost everything real quick. Even investing 50% of your total assets is totally crazy imo. Invest a small part, spread your portfolio and wait for everything to go up. Increasing your portfolio size makes losing a bit more tolerable, imo and would open up a lot more opportunities instead. Bitcoin investment takes a LOT of time for it to grow, just look at OPs example of 2 years. It's a pretty long time imo.

Investing all your assets in bitcoin, i guess is a madness to humanity based on my experienced. I invested all my money in bitcoin some years ago, hoping in less than one year i will achieve something reasonable from the investment but that was the year bitcoin keep dumping in the market. It is better to invest half of your asset to bitcoin in case any negative results, you will not too feel bad.

People are saying that it's beneficial, but during that time, they are considered madmen because of what they are doing. Since they believe that BTC would be the future, they didn't have to worry about anything, and it just paid off. I think it's no different to gamblers who risk everything they have in betting or even a single bet. It's just that it's crazy to do it, but if you have the dedication to it, it just paid off.

although bitcoin is indeed a good investment, but investing all your wealth into bitcoin is a crazy decision. always remember that there are times when we wait until our investment grows. and while waiting for it, we don't know what will happen. it could be that we need money or other things that require us to sell bitcoin while the price is still falling. this will be a loss. so never do this even if you believe that bitcoin is a good investment. leave a little for the unexpected.

We know that bitcoin has profitable for investors and again it will profitable in upcoming time, but this is not good idea, that for Bitcoin investment, we invest our all fund, this is not good idea.

That means the person in your story invested for 3 years, my question is, are you ready to hold your BTC as long as possible, and sell it at the right time, even though you sold all the assets you have? If you hope to be rich because you see the actions of others and risk everything you have, then you must be prepared to be poor because you have nothing.
Because I don't know who you are and how strong your will is, then I personally don't recommend going all in. Invest wisely.

"Invest on what you can afford to lose"

Stick with this golden rule and you wouldnt  really need any advice or following someone on how they do invest.There are really people who are risk takers and there are people who dont want too risk too much
into the market.Investing all of your assets in one go is really a risky thing but it turns out that bitcoin did really make out some good movement in price which it did really result into huge profits.

Its up to someones risk taking on how much they can put on but of course it will really vary on how much you do invested on.If you are aiming for life changing profits then you would need to put bigger risk.