I think Bitcoin will scale to meet the demand for the types of uses that BTC is good for. And since LTC is a straight-up clone, there'll be no appropriate demand left over. There will certainly be demand for *other* uses, but unless LTC meaningfully differentiates, it won't benefit.
Governments that mismanage their currencies are often fond of censorship and confiscation . . . which just takes a phone call to Coinbase or Gemini re their citizens' USDC and GUSD holdings. Whereas DAI holders would be unaffected.