This idea popped to my mind just recently, but I might've understood the thread completely wrong.
Have you considered, that someone might use this as a hedge against LTC, Prime/mcxFEE crash (and also shorting bitcoin?)?
Example:
1) One takes a loan of 1 BTC at btc price of 100 LTC (120 LTC as an insurance)
2) Bitcoin price rises and is worth 140 LTC
3) Loan defaults and you are left with 120 LTC, which is 0.85 BTC
OR
2) Bitcoin crashes and in that unlikely event when LTC (or others) do not, the loan is paid back resulting in the loss of BTC.

I am not sure, if this came up already and if you've already thought of this. This is only a theory, since usually BTC and LTC (and others) drop/rise the same time.