This risk of losing their Cave Heaven completely that the host and the guest have to bear are why divine beings don't like to involve their Cave Heavens in a fight. After all, if they are defeated and they die, they can still reincarnate with the help of their Cave Heaven. But if they lose their Cave Heaven, evertything that thev've worked for over many lifetimes will be lost.
Loki knew all of these, which was why he decided to act weak in order to lure the swordsman into his Cave Heaven and suppress him. Just like the swordsman usually did, he was confident in the power of his Cave Heaven and its ability to overwhelm the swordsman instead of being destroyed by the swordsman, so he decided to go through with it.
This was his plan to deal with the swordsman. With his plan, the swordsman wouldn't be able to commit suicide and rob him of the benefits of his hard work by being unreasonably stubborn.
