This is an interesting narrative. And one I have not proven myself. I have heard it is more true on asian dark net servers. But I would think the latest addition of Monero at Dream (I think?) would fly in the face of this a little. Dark net vendors are getting more savvy little by little.
Litecoin has historically been best positioned to absorb spillover from obsolete use cases excluded by Bitcoin's rise to power. When Bitcoin was too slow for Bitpay to work (Xmas shopping season) I used Litecoin instead because it was the only option I wouldn't feel dirty touching (ETH? Nope. Bcash? LOL git rekt. Dash? Oh Hell naw!).
Despite my disdain for Vitalik's Bailout Fork, ETH has inserted/cemented itself into the primary spillover capture role ahead of Litecoin, but I expect LTC to make a comeback due to Lightning, cross-chain atomic swaps, and greater reliability/fungibility/decentralization proving its superior long-term fundamentals.
It's good for Monero that Litecoin is helping us break up the Bitcoin/Ethereum duopoly. Once a market relents from its Bitcoin maximalist supremacist monopolist (or 'Muh Flippening') paradigm there is no more protectionism and every coin must compete for users based on its own merits. That means cheap tx fees, quick confirms, low withdrawals fees, and extra features such as privacy.