I wouldn't put the blame on Ancelotti or the players, because the team lacked the quality of a good defense and midfield due to injury on their players which started in the beginning of the season. Ancelotti has done his best for the club and he has to leave, let someone else take over. If a coach continues winning trophies, no club would replace him.
Nobody expected so many defenders to be injured, and Ancelotti certainly doesn't want to be in that situation. But strangely, when it happened, and he had the chance to fix things (when the January transfer window opens), he did not take advantage of the opportunity, and it was as if he underestimated the problems they were facing. So for that reason, Ancelotti is indeed to blame for their failure.
I think that's the reason why he stepped down, because he felt he had made a mistake that made Madrid fail to win a trophy.
It's not all Ancelotti fault because it also depends on the transfer policy implemented by Florentino Perez. So Ancelotti had no choice but to play available players, at that time the mid season transfer window was not Real Madrid habit and based on their history they rarely do it. Finally Ancelotti got bad results because in terms of his ability he could not rotate according to the required criteria.