Diversification can be a good base to provide liquidity and more income and also help reduce the risk of market volatility.
technically, cryptocurrencies are one asset class. However, the large disparity between these assets makes them ideal for all types of investment. For example, you can allocate your wallet with 50% bitcoins, 15% ETH, 10% ETH Tokens, 5% stablecoins, 13% altcoins and 7% NFTs.
• Diversification within a highly correlated market sector does not provide liquidity neither does it help reduce market volatility. As you mentioned cryptocurrencies are one asset class and contrary to the op, this doesn't make it ideal for all types of investments as majority of the coins are cheap replicas of others, while a lot more are scams.
• You do not need to own multiple coins, much less when you know little or nothing about those other niches, and setting percentages for certain areas just puts you under pressure to buy something for a "diversified portfolio".