Since you mention Upwork, if you call that piecework auction site "freelancing" I think you misunderstand freelancing. That site caters to and represents the low-end, the race to the bottom in both price and quality. Few people can make a good living from Upwork and Fiverr, and even fewer who live in high cost of living countries.
I have not noticed any downturn in freelance jobs in the last few years. In fact anecdotally I see more freelance work available than a few years ago -- layoffs always create opportunities for freelancers. I also see a lot more people (some of them recently laid off) trying to get started as freelancers and flailing with that, which will appear to make the field look saturated and too competitive. That happened after the 2000 internet bubble popped, and after 2008 layoffs.
Successful freelancers bring more to the table than a list of tech skills or a "stack." They have experience and deep business domain expertise, sufficient marketing, sales, legal, and accounting knowledge to find, sell, and keep their clients. Probably most important they have good professional networks, because freelancing mainly comes down to reputation and word of mouth. No serious freelancer I know or have worked with uses site like Upwork.
I can't tell if you want to get freelance work or develop a complex theory to explain how the world doesn't work as it should. If you want to freelance I would focus on the necessary skills and connections rather than trying to make sense of the confusion of memes and factoids you included in your post.