Yes it is possible. Although the fear is less two satellites crashing into each other and more the fear that a satellite will break up and create thousands of little pieces that could crash into More satellites.

To take the analogy I used before farther.

Now imagine two people Do run into each other, either because one wasn't paying attention or by malicious design. Now picture 1000 hyperactive kids being produced off of that collision. They aren't going to pay attention and will just run around bouncing off the walls, jumping between buildings as they want.

Yes, some will leave the buildings altogether, but many will be around due to orbital dynamics (not getting into that here). So now each person walking around has to watch for other people, And screaming children who don't pay attention (literally can't they aren't self driving).