Israel’s efforts at normalisation with Arab countries and trade deals with them, like that recently agreed with the United Arab Emirates, are not based on goodwill but at improving their own situation in what they see as a hostile region.
Israel is also developing military cooperation with unpopular authoritarian regime Bahrain to help extend some of its power to the Persian Gulf and threaten Iran. This shows the alignment of such an unthinking regime with outside powers against the regional interest.
Holy site under attack
At the same time, some Israelis push for demolishing the Al-Aqsa Mosque and the Dome of the Rock to replace these with a Jewish temple. Violence by Israeli security forces at the Islamic holy site has increased the sense that it is in peril. Declaring Jerusalem as a Jewish-ruled city and the Israeli capital rather than an Islamic one (as done by the United States and Israel) can already be seen as a comparable attempt to undermine Islam, as it would be to put the other two holy sites of Mecca and Medina under their military occupation.
Israel's so often repeated 'right to exist' in no way depends on attacking Islam (as can be seen by Arab states being willing to normalise relations), yet this is what Israel chooses to do. Every time it seems that Israel was accepted in the region, Israel itself will commit some kind of outrage, as if it wants conflict. Destroying the Al-Aqsa site would create an unending state of conflict in which Muslims would either be actively resisting Israel and the West, or Islam would be destroyed.
Making atrocities manageable
It could be that many Israelis believe Islam is irreconcilable with the existence of their state, whose only previous iteration (ancient Judea) predated Islam as a religion. Therefore, they should be expected to seek the destruction of Islamic holy sites.
Clearly, normalisation efforts with Muslim countries would make atrocities much more manageable for Israel, by making it difficult for those Muslim countries to uncouple from Israel economically, much less commit themselves to any form of resistance against Israel.