The feeling Loki must have had when, for the first time, finally people bowed to HIM, paid HIM respect, instead of seeing him only in the shadow of Thor, it must have been so powerful.
A warm surge in his core, melting away the memory of the cold, melting away the frost giant within him and letting him hide it. Pride; he was as worthy as his brother, and yes, even wiser! He could be a good king, a great king- better than Thor, and had he not been an accursed Frost Giant, a mere tool, Odin would have given him that title, not Thor.
But of course the people he considered friends- Thor’s friends- they only saw him as being manipulating and calculating. He really did want what was best for Thor, and that was why he refused to bring him back- the same reason he refused to ask Odin to bring Thor back. Of course, now it would also mean that Thor would take the throne, but the good of Asgard truly did matter despite his jealousy- or it did at the time. But of course no one would trust him because of how he came to the throne, and even for himself the glory of his ascension was tainted by the knowledge that his words had put the man he had loved as his Father into a state of near-death. And the pain of his heritage being kept from. Even his Father lied to him, the man he put the most trust into.
It broke him, it changed him, and he could no longer bare it. He was seeking approval, a lost and hurt child, but every where that he sought praise or reassurance was not met with what he hoped and craved- or at least not in a way he could see it. Even his Mother could not see his pain, could not understand it, and the guilt was too much, so, being the sort that does manipulate, he told lies to his brother, who would bring ruin to Asgard, hoping to keep him away. He could live on Earth because while he hated his brother for living in the shadow of such a violent fool for so long, he still loved him. If he didn’t love Thor, then he wouldn’t have those tears in his eyes at the end of Thor. And he sought that approval later from Odin, only to be told again that he could not be Thor’s equal, as he saw it. That one syllable, that damning word, ‘No’, spoken softly to him when he just wanted to be acknowledged by the ones he loved. But he never got it, and so he just could not deal with his love for Asgard, for Thor, for Odin, so he left it behind him in that moment he let go of his spear, falling into space.
And thus a monster was born.