having this in your signup flow feels so antiquated

yes and no
I don't agree actually 

Bc it also feels familiar and could help have anxious people start engaging with a crypto product before having them get a wallet ready

i agree that familiar flows help build trust - i think that's an astute observation, one we ("the crypto industry") largely miss.

as i've adopted passkeys i personally find password-based auth methods to be a big turn off. i recognize the masses are not yet there though.

related thought: passwords imply custody.