Is it up because of the Switch 2?

Take a guess. Usually happens when a company is about to undergo a major release 

Yes, but more specifically because of the headlines about Switch 2 selling out. I wouldn't make too much out of it. We still need to see how the masses will react to the prices, and what the future library looks like.

Picked up Mario Odyssey physical for £25 which is scandalous for an 8yr old game but it did make me think. If NN games never come down in price digitally and these first party games have a NS2 “upgrade” pack for £7 and a NS2 version (with the upgrade pack included) for £66.99 using TOTK as an example then what’s to say the used physical space for games due to receive an update isn’t gonna start to see their prices increasing?. Probably a good idea to pick up a few physical games on the wish list before that possibly happens. Regardless, looking forward to playing MO on NS2. 

They do come down in price digitally.

Just on certain days like MAR10 day and Christmas.

https://comicbook.com/gaming/news/nintendo-switch-holiday-sale-animal-crossing-zelda-sonic-discounts/

This was Nintendo's excuse for not crediting Grant Kirkhope for composing the DK Rap in The Super Mario Bros. Movie.

With the latest update, Virtual Game Cards are now supported on Switch, allowing digital games to be shared with other Switches. 

https://www.gonintendo.com/contents/47959-switch-firmware-ver-20-0-0-released-includes-virtual-game-cards-gameshare-and-more

You can now also upload your Switch 1 data for a transfer to Switch 2 when it releases.

https://www.gonintendo.com/contents/47960-switch-firmware-update-lets-you-temporarily-upload-system-transfer-data-for-download

That transfer save data is gonna be nice considering the cloud saves arent transferable through the NSO.

Gonna continue my playthrough of Smash Ultimate on Switch 2.

So the new virtual game card system was supposed to be optional: Nintendo Solves Digital Game Sharing In Weirdest Way Possible, and you were still supposed to be able to use the old primary console system, which is better for sharing between just two people as you can both have access to each others entire libraries and play online together with one copy at the same time. "We think many people will enjoy the benefits of virtual game card, but it is an optional feature, and the original method can be used instead."

But the Eurogamer article today doesn't mention that it's optional at all. Switch users say Virtual Game Cards are a "downgrade" as online game sharing changes | Eurogamer.net

Is the old primary system thing gone or not? Would be a real shame as I was hoping to share digital libraries with someone on Switch 2.

I was looking for the old option but couldn't find it anywhere. =/