In this situation, should you exercise limited confidence in the cyclist you are overtaking, whose hands are not on the handlebars?

The video shows a cyclist whose behaviour (riding without holding the handlebars) clearly violates Art. 33 para. 3 pt. 2 of the Road Traffic Act. These circumstances indicate a possibility of him losing control over the vehicle. According to the principle of limited trust (Art. 4), in such a situation, you cannot assume that the road user will obey the regulations, and you must be prepared for their sudden, dangerous manoeuvres.