You can buy a sheath that drops the knife down.
I made my own and it's been working really well for me for 7 years.
The belt loop is simply a couple inches longer so that the top of the knife handle hangs just below the bottom of my pants belt.
No interference with my pack belt.
I prefer to have a knife on my hip instead of pack. You never know when you're going to need it. Sometimes I just need to cut a blackberry vine out of my way when bushwacking.