Good point, many times people think of diversification only in terms of their portfolio, but it is also important to diversify our income streams, many people depend exclusively on their jobs to get some money, but regardless of the amount they earn if at some point they are fired they will find themselves facing huge economic issues really quickly, however if instead we have two or more income streams if one of them dries up we have another ready to help us out soften the blow, until we can find yet another income stream to replace the one we lost.
But there is a catch in crypto trading, alt coins are strictly dependent on BTC for there price gain or loss. Even if we diversify our portfolio, if btc falls all our coins will fall in price. So there is not much gain in diversifying your crypto portfolio. These are just my few satoshis.
An you are right about that observation, there is a very high correlation between bitcoin and the movement of altcoins, however there are more markets than the market of cryptocurrencies, you can choose other attractive assets from those markets and in this way achieve a true diversification of your portfolio, however while this could give you some protection against the volatility of the market, at the same time we need to think if this is the right time to diversify our portfolio, after all many are expecting for the bull run to continue during the next months and in that case it would be better to wait until the bull run is over before we try to invest in other markets.