I'm encountering this issue as well.
It looks like the bundled lib steam isn't compatible with M1 Macs.
$ /Applications/Loop_Hero/Contents/MacOS/Loop_Hero
2022-05-11 16:49:59.817 Loop_Hero[29268:6346174] Nil context detected
2022-05-11 16:49:59.817 Loop_Hero[29268:6346174] Command Line = "/Applications/Loop_Hero.app/Contents/MacOS/Loop_Hero"
MacAppSteamInit 1282730
steamfile:/Applications/Loop_Hero.app/Contents/MacOS/steam_appid.txt
Steam being initialised with appId 1282730
Steam_Init
Error: Failed to load libsteam_api.dylib from /Applications/Loop_Hero.app/Contents/MacOS/libsteam_api.dylib
dlerror:dlopen(/Applications/Loop_Hero.app/Contents/MacOS/libsteam_api.dylib, 0x0001): tried: '/Applications/Loop_Hero.app/Contents/MacOS/libsteam_api.dylib' (fat file, but missing compatible architecture (have 'i386,x86_64', need 'arm64e'))
GameName not set at this point
Failed LoadSteamLib() call: Error loading libsteam_api.dylib
SteamInit failed: Error loading libsteam_api.dylib
...