Yup, this sounds likely. iCloud Drive has a habit of resetting things during an OS update, so it could be the reason it was fine until you recently did a major OS update.
edit: just for anyone else who comes along with the same issue →
Set the vault folder to always be downloaded (if you are using macOS Sequoia or above) or turn off Optimize Mac Storage for the entire iCloud Drive. It should be fine after that, but keep an eye on those settings with any major macOS updates.