Diversification is about picking the best of each market segment and buying a little of each. It is not about chasing penny stocks.
Portfolio performance is only gained with a range of stocks from each sector. The lower caps will always be more volatile and some will outperform the dominant stock.
A company with a lower cap stock whose products do not have a Unique Selling Proposition are doomed to failure.
What's the USP of your candidate shitcoin?