Bottom wire burnt off........probably because it had been making contact with that 'curled' lip where opening has been made.
Not first time that has happened.
T-stat is probably still good.....
Easy to test with multimeter.
Power off------With water temp cool both t-stat contacts will be closed......so should have continuity from top wire connection to bottom wire connection.
Power ON----(and broken wire fixed) should have 120V AC at lower connection (and at element).
OR....with water cool turn electric on and check for hot water 20-30 mins. later