Basically yes. There is a lot of consolidation happening on the base chain too.
It actually shows that hash rate is also rising. The difficulty rose in the last difficulty epoch and it looks set to rise again.
Discussion
Low activity on base layer to me seems like no good.
But you are saying lot of consolidation happening.. not sure what that means.
Hashrate increasing means good. Hmmm not sure what to make of it all.
Low base layer activity does seem unusual, but I'm just saying that I am seeing activity, new TX's in realtime and most of them are consolidations where people are taking their small utxos and combining them into larger ones.
Small utxos can be very troublesome when fees are higher, since the fee grows with each new utxo, you can't just combine a small utxo with a large one and think you are saving in fees. The cost to add that small utxo to your transaction may well be larger than the utxo itself. So it is just more economical to treat it as "dust" and pretend it doesn't exist.
The problem is that all bitcoin nodes keep track of utxos in a database that needs to be fast and it is a potential problem for smaller nodes if that db gets too big. It can make smaller nodes struggle to run efficiently.
Consolidations reduce the number of utxos in that database, meaning less bitcoin lost as dust, but also less db capacity used for utxos that will just never be spent.
It probably won't last forever, I suspect this is a testament to the success of lightning. I don't think no one is using Bitcoin, I am using it, mostly over lightning though.
Anyway, this thing grows and shrinks, think rush hour, so it isn't going in a single trajectory, but it is nice to see some really old transactions finally clearing too.