There are many privacy tools in the btc ecosystem but not all are on BTC layer 1. Liquid has confidential transactions, and you can then use atomic swaps and go back to btc. There is lightning (layer 2) with very good privacy if self custodial.
Ark (based on Arcade) is a new layer 2 that again supposed to be quite private. There is cashu which is the most private of them all.
So, all in all, I would say privacy tools are developing!
