Dropping naps & nighttime terrors - a link?

[TeaTeaTea]

My 2 year old (25months) is starting to drop his nap (will nap at nursery for hour and occasionally if in the pushchair) but won't at home. I'm fine with this and instead encourage quiet time. I also will put him to bed half hour earlier - I have to as he is EXHAUSTED.
He will go to bed with no argument and usually asleep within minutes but has been waking having nightmares each night, usually just before midnight so deep sleep (could be night terrors). He doesn't take long to go back to sleep after 5mins reassurance.

Is it because of the nap-dropping transition? I've always believed in the school of thought that sleep breeds sleep so over-tiredness can make for restlessness.

Last night he slept from 7pm-7am (until his baby sister woke him) so understand he's capable of dropping his naps just feel for him that he's having this middle of the night disruptions.

I'd be more inclined to say over tiredness causing restless nights. So maybe try an even earlier bedtime?

Thank you FATE, since posting the above I have put him to bed earlier (on behalf of my own exhaustion too!) and he's slept better, even when getting up I've only had to call from the other room & tell him to get back into bed (watching from the monitor as I feed my younger baby) and he's done it without any issues, bless him.

The sleep is a constant working progress I find, you can suss it out and then they have a regression or external changes upset it all! I'm so much more prepared with my 2nd one now but no doubt I'll be back here with questions in the coming months!