The question you have to ask yourself is pretty simple:
Do I want to play it safe and lower volatility?
or
Do I want a volatile moonbag?
If you want the moonbag then an LP is a bad idea unless you believe that both assets are going to moon. In the case of LEO/HIVE or LEO/CACAO both could indeed easily moon together. Anything paired to USD is a much safer bet, with volatility being reduced by a square-root.
In the example I gave in the OP BTC went x4 but their LP position only went x2.
The same would also be true of Bitcoin collapsed 75%.
The LP would only be down 50%.
Not only that but the LP is still 50% USD so you can liquidate the position after a crash like that and just ape all the USD into BTC and buy the bottom to turn it into a moonbag.
And none of this factors in the yield that the LP is generating.