Diversification helps you to spread risk among your assets especially in crypto where the market is very volatile, it's very helpful if mastered.
Over the past year, I think a lot of investors strongly regretted that did not use diversification, it would be possible to save and even earn during the next big price hike
If they use diversification they will loss even more because altcoins are affected big time by the bear, if they convert their coins into BTC, they would loss at the current price but would only loss lower compared to altcoins assets. We have different strategy but diversifying your investment is recommended in any business or investment venture in life.
I agree, for me, diversified risks are the withdrawal of a part of the funds from cryptocurrency to another bizdes. And it really works, I recommend reinsured.