The problem of many team casualties can be figured out with the rest of the players on the bench. The main reason i like Ancelotti a lot is because even at this period he knows what to do, although you will still be some shaking in their defense and midfield but that won't stop them from winning games since they have a strong froward to score for them. Hopefully, most of the players on injury will be back before mid-time. Again, I would say that with their current team status, they are not strong enough to face teams like Mnajester City, Barcelona, Bayern PSG or Arsenal in the UCL.
This is exactly when you see a good manager be a good one, because right now he can do very well then it means that he is a great manager. If the whole Real Madrid team is healthy and they are winning games, that's not an achievement, you give me this Real Madrid team and even I would be able to win the league and UCL with them, wouldn't be a big achievement, you can do it too, half of the world can do it. But if he can keep the team going and winning with this many injuries then it would be something that will be great for him, it would show how great Ancelotti is without trouble.
I believe that it is going to be a tough situation but the possibility is out there and it can be done, I hope to see a lot more of this happening. Real Madrid is spending a lot on player salaries, everyone talks about transfer budget, but the salaries they are paying is huge, and they need to keep winning stuff to keep this going, if they fail to win even just a few years, they would suck.