Neil Gaiman is a skilled author of fiction, and that's what his book Norse Mythology is. Like many popular books of Norse Mythology it's his own synthesis and extrapolation of the various myths and sources into a kind of coherent narrative. I'm not saying that in a derogatory way; most people would no doubt consider it a better (or at least easier) read than the Poetic Edda. It's just that that's not history. How the internal logic of that narrative is supposed to work is up to Gaiman.

What people actually believed is history., The relation of the Eddas , much less those extrapolations, to what people actually believed is at best tenuous and unknown, and at worst just false. See, popular books on Norse Mythology tend to be just retelling and extrapolation of that same material from the Eddas and a tiny bit from other sources. And people have pored over and documented and cross-referenced all that stuff that it seems like we know a great deal about Norse Mythology, not least if you look on Wikipedia. But we really know very very little about what was actually believed and practiced. To lay out the problem:

There exists no written sources from anybody in pre-Christian Scandinavia, or even well after christendom ruled. The earliest letter is an 1085 gift from king Knut of Denmark to the church in Lund. Written in Latin and beginning with "In the name of the holy and indivisible trinity...", it's not particularly pagan. Other early documents also legal or law related.

There are very few contemporary first-hand accounts from people of other religions. A tertiary account often used is Bishop Adam of Bremen, who had every reason to portray the Scandinavians as in dire need of salvation. He describes things like massive human sacrifices as the temple at Uppsala. Some things he wrote were correct (Uppsala is on an inlet north of Birka), while others are absurd (Scandinavian mountains are inhabited by amazons and cyclops).

The main sources are due to Snorri; written down in Iceland by Christians centuries later, who are presumed to have introduced some Christian influences (which does not mean there wren't any there earlier), but also had others (such as asserting Iceland's independence from Norway).

Beyond the source-criticism of Snorri, the whole concept of Norse mythology tends to be based on a set of other assumptions that went long unquestioned. Namely that these stories were representative of what was believed in other places than just Iceland (called the 'Icelandic problem' by Andrén), that Old Norse Religion was a single thing, practiced the same way across Scandinavia. More often than not it was also assumed it was fairly static and unchanging set of beliefs, and it's often assumed that it was not influenced by foreign religions such as Christianity and Roman mythology.

All the above are believed to be false now. Archaeological evidence shows that religious rites, such as burial customs, were practiced quite differently across Scandinavia and with large differences even within specific regions.

Then there's the perennial question of Snorri's reliability. Snorri's Baldr story is usually singled out in particular as being a Christian influence. But it may have other influences as well; it includes the messenger-god Hermod - a name who occurs nowhere else as a god, and with a name and function similar to Hermes. Another is Forseti, a god documented in Frisia, but with scant evidence of veneration in Scandinavia. One god that was venerated highly though, at least during the Vendel Age, was Ullr. The evidence for this being many places named after Ullr, including several Ullevi - vi indicating a cult site. (Swedens's ex-largest stadium in Gothenburg is named Ullevi for its site - and coincidentally Norway's largest stadium is named Ullevaal , also an Ullr- related place name) One of which has been excavated (Lilla Ullevi in Upplands-Bro, one of two 'Ullevis' in that municipality) and confirmed to be a cult site. The Thorsberg chape, a scabbard piece from Germany, has one of hte oldest Runic inscriptions from about 200 AD, and mentions a servant of Ullr (in proto-Germanic form; this was well before Norse even existed) But despite evidence of centuries of worship of Ullr across Scandinavia and North Germany, Snorre doesn't have one myth to tell about him. He's barely mentioned there, nor in the Poetic Eddas.

Then there's Freyr (or Frö around here), the fertility god. Not only does he have tons of place names (including a number of_Frövi_ places), he's got a whole day of the week named after him, and not just in Scandinavia but across the Germanic languages. He had to have been around a long time, and Adam of Bremen lists him together with Odin and Thor as one of the three gods of the Temple at Uppsala, and a cult image of him being destroyed at Skara (both of these towns would be religiously re-purposed as dioceses)

But there's lots more about your man Loki and Fenrir. I wrote a post about Loki recently and to summarize: There's no agreed upon view of Loki, he's an odd character and different theories abound among the comparative-religion people. He has no place names after him. He's got no week-day. He's got no artifacts with his name on them. No evidence of him before the 9th century at the earliest. Both Loki, Fenrir and that Ragnarök motive (as well as Thor's fishing) occur principally on inscriptions/monuments that also have explicit Christian symbology (e.g. crosses), the earliest being the Gosford Cross and another is the Ledberg runestone, Thorwald's Cross and the Skarpåker stone.

So what we can say for certain about these stories is that they were introduced late, after quite a bit of christian contact. And at the very least they were considered compatible with Christian beliefs. Or there could be any degree of syncretism, from existing stories being expanded and influenced by Christianity to having been inspired by Christianity in the first place. But certainly not all of it is; As I wrote; Loki's binding, Thor's fishing and Ragnarök all have biblical parallels, but the wolfs don't figure into the Christian apocalypse. Tyr (Mister Tuesday) is one of the older gods, and images of him with the wolf go back at least to a 6th century bracteat (which also depicts the god in a way inspired by Roman god images on Roman coins) It's not so far fetched to draw a parallel from that bound monster, and the bound Loki to the to the biblical demons or fallen angels bound in the underworld until Doomsday. The Midgard Serpent is actually explicitly used as a synonym for the biblical Leviathan in several early Christian texts from Scandinavia.

So in short, the Völuspá and these things are thought by many to have been written by people with at least have been written by someone with knowledge of Christianity.

Which, however, does not mean these things weren't not part of the religion. If people believed it, it was by definition. What Scandinavians believed in the year 500 is not necessarily what they believed in 1000. Perhaps Ullr went out of fashion after the Vendel Age, while newcomers like Loki were introduced.

But whose religion? Class is a factor here. It's often the history of the important people that gets preserved; The Sagas tell you all about what the kings did and very little about how ordinary people lived. And the thing here is that it's the wealthy elite, the viking kings and jarls if you will, that have similar burial customs across Scandinavia. It's the elite who are literate. It's the elite who can afford to have a runestone carved and erected (yes, one thing we do know here is that there were professional carvers; many stones are signed) It's the elite who have graves full of sacrifices to the gods, who held the blót, (political and religious power were intertwined) who had Mjölnir amulets, who employed the skalds who wrote the stories. And finally it was the elite who traveled abroad and came in contact with foreign religions and ideas and were inspired by them. It was the same group who would first convert to Christianity. But far before that they'd been around the Greco-Roman world; the runic script comes from Old Italic; lots of Germanic folks from up north served in the Roman legions. And so on.

It's entirely possible, if not likely, most of the mythology as-we-know-it was mainly a concern of that group. I mean the pantheon and the legends and the stories, all influenced and inspired by encountering similar things abroad. The ordinary people may have had a more oriented towards practical ritual than the more abstract cosmology and pantheon.

Norse Mythology is a topic that has the property that the more you learn, the less you know.

You may have asked in the wrong place. I don't know all the history of Loki as a mythical figure, but I can say that, in the story which has come down to us? Yes, Ragnarok causes itself. Philosophically, if not historically.

To be cruel to the one fated to doom the world seems like a damn good way of seeing to it that the world ends.