Yes... which means you still have an on chain tx for the swap from to. Which means when you spend it on some drugs for a certain price, there is a on chain tx that closely matches the same value amount you spent on the drugs. Now you can say no one knows how much I spent on the drugs but if the fed is watching they will know how much you bought and it's rough estimate of how much its worth. Then they can see on chain tx in bitcoin for close to that amount and start monitoring you. BTC doesn't have a privacy failure. People do.
Discussion
while this is pedantically correct,
it's foolish to believe that UX is irrelevant.
Bitcoin privacy UX is terrible.
Across the board, self custodial LN sucks, all the CJ options since Whirlpool are dodgy and difficult to establish privacy guarantees, buying with KYC is overtly encouraged for convenience etc...
so yeah sure
if you decide to be hard core,
label all your utxos
only buy non-KYC
keep your stacks separate
and never ever consolidate
sure.
OR
just use Monero™
and you don't have to worry about anything *except* for edge cases that are only relevant if you are under targeted surveillance