The truth is that only some of the songs played when "Folk" music was popular were really "traditional" songs, and very little of either the singing or the instrumental music had much to do with "traditional" styles.

The revival of traditional singing and instrumental styles, and repertoire really developed after that, not because it was popular or marketable, but because people cared about it and were interested in it for it's own sake--there are way more people who have studied, can play, and teach traditional styles and repertoire than there were back then, and the level of skills among revivalists are much closer to the those of the source performers than ever--so it's not disappearing at all-quite the contrary--