Coinbase / Morpho Bitcoin-backed loans, how big is the risk of variable rate going up to something insane like 50% or 100%? Or even something less insane but still unreasonable like 15%?

I've been reading about Bitcoin-backed loans, and it looks like the entire system is becoming much more mature. I saw a post about a guy who got an approval in seconds. This is amazing. But it got me thinking.

What if you borrow and the rate spikes (since it's a variable rate, adjusted by the network constantly)? What if the rate goes up so high that it just keeps increasing your principal and gets you to 86% LTV? And even if it doesn't, you would still end up losing money if you can't close out your loan right away.

With traditional variable rate lending (which is still a bad idea), at least there are regulators and politicians that would step in given enough public outcry, if things got really bad. But crypto-backed loans are still so niche that even if the rate spiked and held at that high level for some time, nobody would care.

Is this a valid concern or am I missing something?