What is actually happening
Google paces a daily budget across the day, but on a campaign with tight budget and strong demand it will front-load. You see spend stop and assume something broke.
When it matters
If the campaign clears your break-even, running out of budget every day is the clearest scaling signal you will get. That is money you chose not to make.
When it does not
On an unprofitable campaign, the cap is doing useful work. Raising it buys more of a loss, and day-parting around it is treating a symptom.
The check
Look at "lost impression share (budget)" alongside ROAS against your break-even. Those two numbers together answer it in ten seconds.