Yes.

Otherwise growth in Bitcoin is essentially capped and will move to other currencies. Speculators will also move on and the price will dip temporarily. This could possibly cause some spiraling issues... lower growth, lower price, higher fees, halved block reward. Bitcoin could lose their first mover and networking effect advantages in that type of situation.

WHAT WILL HAPPEN IF BITCOIN BLOCKS ARE AT FULL CAPACITY?

If the blocks reach full capacity before there is a functioning transaction
fee market in place, Bitcoin investors will likely see the price drop and may
experience difficulty withdrawing their coins from an exchange. Elsewhere
in the Bitcoin economy, problems could be much graver: casinos that literally
stop functioning, coin mixers screeching to a halt, and coin faucets that
run dry.

Faced with these difficulties, entrepreneurs running these services would
likely set up working alternatives by moving away from the Bitcoin blockchain.
This in turn would make the average block size drop significantly,
thus clearing up space for normal transaction confirmation times in the
network.

The process of gambling and laundering services moving away from the
Bitcoin blockchain could cause a series of rallies in the altcoins (of which
we may already be seeing the start). Shared Coin, for example, includes any
fees within their transactions so that users can get quick access to their
laundered coins. If the block size limit is reached, transaction times will be
slower, and these users may switch from Bitcoin to altcoins.

It’s likely that for gambling and mixing, the most liquid altcoins will be
those highest in demand: Litecoin, actively traded in at least 17 markets,
and Dogecoin, actively traded in at least 7 markets.3 Privacy-oriented coins
such as Dash and Monero could see significant rallies. The short history of
altcoins suggests that when the most liquid coins rally, the rest are lifted
with the tide, resulting in short-lived but strong rallies.