After what Madrid experienced in the UCL, the players condition must be in a slump. Plus there are rumors that Ancelotti will leave at the end of this season, precisely after the CDR final. Like it or not, Ancelotti has given his best but his era is indeed over and Madrid must be able to adjust to the modern era game with a coach who has a better system. The La Liga trophy will be easily locked by Barcelona so it is quite difficult for Madrid to catch up on the points even though the difference is 4 points but in fact the quality of Real Madrid game is still far from ideal.
All of this that you wrote is very exaggerated, the Ancelotti era is not over, it also makes no sense for him to leave Real Madrid just because he did not win the European Champions League this season, and as for the La Liga title, it is still mathematically possible for Real Madrid to win it. Real Madrid achieved a lot with Ancelotti without having spent a lot of money on signings, at least compared to many other teams. His contract ends on June 30, 2026. So it makes no sense for him to leave this season.
I think Ancelotti understand the importance of timing and have seen that it is better to leave when he is still seen as a hero rather than when things have gone badly. He has made Real Madrid win trophy for most of the season and going a season without trophy might make him lose some of those admiration he enjoyed. This is the reason he might be considering leaving to ensure he do not spoil his reputation. I completely understand him and I will support whatever decision he takes.