Should we just be focusing on BTC, or would we be better off diversifying (maybe Etherium?).
Well for me diversifying is always a good decision, but in the world of crypto, bitcoin is the most reliable coin to invest in specially during dip.
Majority of alts are just following the movement of btc, so as you notice if bitcoin face a minor or major dump most alts are also doing the same. However it doesnt mean alts are not good to hold, its just that bitcoin is less risky compared to them.
It would be better to set a target amount on holding bitcoin (lets say 1 btc since you already have 0.4) before thinking of buying alts. Eth is one of established altcoin and trusted as well of many investors so if you ever consider to diversify, eth is one of the good option.