SPOILER AHEAD
Does he actually die in the story, or is there another route where he won't?
Or Does the gray thing mean something else
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If you're referring to the alternate ending where you get MC's monologue followed by the unknown character, then I can only say that that could have happened.
But if you mean the main storyline, then yeah that's the canonical ending. In an ideal world, there's another path where things didn't end that way. But this ain't it, just like irl where unwanted things simply happen. That's the conclusion of MC's arc ^^