Buying only Bitcoin or at least 90% Bitcoin.
I do agree that BTC must be your primary target of investment in crypto. IMO 60 to 70% of your capital should go in BTC and rest of capital for strong alts (top 10 alts at CMC) and short term trading. OP point is also valid that when BTC goes down every coin goes down with it. We have to accept that fact, the logic of equity trading don't fit here.
You should allocate good percentage with Bitcoin since this can be your safe haven while the altcoins are not working properly, holding Bitcoin is always advisable same thing on diversification. Never go all in even on Bitcoin, that’s still risky and not a good way to invest. I do hold Bitcoin and trade altcoin as well, this is very effective for me.
As we have observed throughout the years, bitcoin has been tested by time. There will be ups and downs, but that's just part of the market. But its value has tremendously increased as compared the last 5 years or so. It is the top alt, so we can assure ourselves that this will not disappear when we are sleeping. And then to diversify your portfolio, look at top 10 alts first and evaluate which one will have the strongest applications in the market. Because with strong app, you know they can survive even with bearish market.
Diversification is very good, although I think that internal diversification in crypto is something else, when we diversify in crypto we think of altcoins, and altcoins are usually a direct consequence of the movements of bitcoin and bitcoin is the boss. Currently there is the market for NFT games which has capitalized a lot of money in projects which is a similar fever to those of ICOs in 2017-2018, which is based on tokens that are relatively new, some people have capitalized money there and have done enough, but the investment and the risk is high.