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You are right; that's the reason why some people cease to invest in Bitcoin and land themselves in a hot soup of shitcoins, but still end up regretting their decision when they can't get any profit. Some people usually have the mindset that Bitcoin is too expensive to buy a whole, but I still try to convince anyone I come across with such a mindset, telling them that they don't need to buy a whole of Bitcoin at once, nor do they need to save for many years before they can buy one Bitcoin at once. If one is still consistent in their accumulation, either weekly or even monthly, depending on how often they are getting the cash inflow, then they might still be able to accumulate a huge fraction of Bitcoin before they realise it.
Basically I don't mind someone's decision to diversify their assets instead of just bitcoin. Of course I don't want to elaborate on the potential benefits of diversifying them, but let's be honest that such an approach can never go completely wrong in your investment plan.
, but don't make the mistake of thinking that investing in shitcoins is considered diversification. Don't forget, the entire crypto industry is largely dependent on bitcoin, every market move follows bitcoin, so it's naive to invest in shitcoins and think it can save you risk.
You can see, during last year's extreme bear season, bitcoin fell from $69k to $15k but only in the first few months of this year. Bitcoin has recovered and is at $30k, while thousands of shitcoins are still dropping hundreds of times and haven't had any significant recovery yet. So investing in shitcoins is not called diversification, diversification is when you invest in non-crypto assets.
In the crypto market, bitcoin is the only investment we have, the rest should only be considered gambling and not investment.
To the readers of the topic. In my humble opinion, diversification for plebs like us is a bad investment strategy. VERY bad in fact. Why? Because we don't have the same amount of capital as Warren Buffett to make it effective. If their $1 billion invested makes 20% in one year, that's $200,000,000. I believe that's more than enough especially if they outperformed the S&P 500 index.
Plus we don't need the hedge to reduce volatility because we are not asset managers who manage other people's money. For us, we concentrate to one or two investments, if we want to truly make an amount of money that matters.