Dips and rallies is part of investing, it happens in every asset class except t-bills. If you got stressed out, you probably need to diversify your portfolio to appropriate allocations for your risk tolerance. A 100% cryptocurrency position is bad strategy, or no strategy at all.
It is always better to have it in mind that there will be time for correction, even if you diversify as long as the assets is crypto the dip will also affect it, anyone who can not afford to accept the dip can strategize to sell while the market is full operation oe when the price is pumping, dip is part of the market, it helps the market to be healthy.
OP is probably referring to diversification not just within cryptocurrency but outside of it, with other assets apart from the ones which we can choose from in cryptocurrency. As OP pointed out, giving your 100% investment capacity to cryptocurrency alone is a bad strategy, if it is at all.
I agree with OP. If a dip in Bitcoin's price is depriving you of sleep then you have probably invested more in it than you should have. Perhaps you need more diversification to balance your investment portfolio.