That's usually what happens here. Remember though: exactly this scenario played out on Ethereum, and the non-fork without confiscation did not catch up to the hardfork. So it's not a given that the "moral" chain will be the most successful one.
The fiat price is simply a reflection of the fact that the number of people that are willing to stick to principles over profits and not staying where the masses are is not only small to begin with, but shrinking over time.
I'd say it's a new chain with a genesis block at whichever point the confiscation happened.