You know the factors to consider when investing in bitcoin**, and those kinds of considerations could be accounted for when considering shitcoins or various other projects as well.. including ICOs, Defi, NFTs... and then sometimes if we are considering diversification, there is a difference between diversifying into different asset classes versus diversifying within the same asset class (if you might know the difference or that something in the asset class is sufficiently different or even worth investing into).
Diversification of investment assets may be a good option to pursue so that one can profit from several other assets besides just bitcoin. But I think right now it will be better when they focus more on bitcoin investing rather than diversifying assets into altcoin because the current bitcoin price has given them the opportunity to get it low price.
I wouldn't recommend an ICO, Defi or anything like that for anyone at this point other than just bitcoin. If they don't invest at this point where bitcoin has lost 75% of its value since ATH, then I don't know of another best time to do so. They can still invest in altcoin at any time, but it would be better if they don't miss out on investing in bitcoin as their main investment now.
Diversifying assets with altcoins is pointless, you can invest in altcoins, but that's not called diversification. If you want to diversify your investment, like JayJuanGee said, invest in other assets like real estate or gold instead of bitcoin and altcoins. I also don't hate investing in altcoins, and I agree with you that investing at this point is too risky while bitcoin is very cheap so investing in bitcoin is a perfect choice. Altcoins are only suitable for the short term and should be invested during the bull season to get good returns and minimize risks.
There is no absolute "need" to diversify either, especially when someone is early in his/her investment and while still in the relatively early stages of building an investment portfolio.. So if someone is new to investing, and can only invest a few thousand per year, it may well be o.k. to just balance in cash and bitcoin.. and to formulate various simple accumulation strategies... after a few years, the investment portfolio may well end up growing to $20k and then to $40k, and then at some point (upon your own choosing), there might be some benefits to diversifying into some other assets .. but even then, diversification might not be necessary, so each person will need to consider how much diversification is comfortable...
As far as shitcoins are concern, I find all of them quite problematic, and sure there might be some ways to get in and out of them, yet many times there may be too many distractions from the main investments.. so individuals have to measure if they might consider 5% to 10% or some reasonable and prudent amount and maybe they feel some desire (or reason) to learn about other matters, and consider their investments of time, money and energies to help channel their learning.. which might be o.k. if it is down in moderation and does not end up devolving into some BIG distraction that ends up causing loss of focus and even loss of time and loss of some if not all of the power of compounding.. which is something that comes from investing a long time, rather than bouncing around.