We all know that there is a hard limit to the number of bitcoins that could ever be minted. That limit is almost 21 million BTC (minus a few Satoshis). Long term holders hope that this limit will cause the values of their coins to go up considerably due to increasing demand.
However, there is no limit to the number of shit coins that can be invented. In fact the ETH shit coin now has a market cap that is of the same order of magnitude as BTC. Furthermore it is an inflationary coin.
If many people move their capital to these alts won't this negate the benefits of the 21 million BTC limit for Bitcoin holders?
No. Altcoins will be altcoins. Bitcoin is bitcoin.
When you are investing in bitcoin then you're basically guaranteed to have a minimum percentage of the total amount of bitcoin that can ever exist. Altcoins and bitcoin together make up the cryptocurrency market. The more people that are investing in altcoins then the entire cryptocurrency market cap goes up, but bitcoin market cap does not go up.
There can be many instances where altcoins go down but bitcoin goes up. They are two different investments that differ on many levels, and thus the issuance of new altcoins do not dilute your bitcoin holdings at all.