The reason to NOT diversify when you don't have very much investment tends to revolve around that it is not necessary.
The reason that people tend to diversify is to take risk out of their holdings, especially if the size of their investment portfolio starts to grow to significant sizes, so if you are just starting out you may well not need to diversify, and also you may not need to diversify beyond cash and bitcoin until after you might build your BTC investment up to a size that you start to feel uncomfortable having too much in bitcoin and/or cash and nothing else... but there are some folks who choose not to diversify beyond bitcoin and cash, and that is not completely wrong, even though it could have some problems by not having a bit more value spread out, especially once your investment portfolio might start to become the size of several years of your income/expenses.
In the bitcoin (and/or crypto) space, the use of the term "diversify" is frequently used to wrongly proclaim that people need to get into shitcoins, and sometimes it is misleading in regards to the concept of diversifying across asset classes rather than within the same asset class, which surely in the "cryptospace" bitcoin is the leading asset so it hardly makes any sense to diversify within the asset class to other assets within the same class, unless you might want to limit such exposure to a small amount .. or maybe if you are just distracted and you don't know what the fuck is bitcoin, then you might conclude that there is some value in buying shitcoins.
Another misleading part of diversification seems to be that some folks want to argue diversification for the mere sake of diversifying, but they have no clue about the reason why they are diversifying, and if they end up doiong that, then likely they are just diluting their investment, and it is worse in the case of people who might not have a lot that they are able to invest... so if those people with small amounts to invest end up diversifying (or overly diversifying) then they are not able to advantage for their knowing a good asset such as bitcoin and they end up not putting enough into bitcoin and putting way too much into crap and they are not starting out with much value in the first place.. whether we are talking about $10 per week or $100 per week or some other relatively small value amount.
The way is see it I think that most newbies that feel the need to diversify have not understood the value of bitcoin as an asset, and most of them think in terms of the more asset the more safe I am, but they fail to understand that having little value in many asset is a waste of time and they miss out on compounding value of bitcoin, what newbies need to see is that having value in one asset like bitcoin would be better than diversifying.
And I think it's good to only diversify when you have enough cash and income value to mange it, most newbies have very little cash and income and still want to diversify, there by reducing their allocation to bitcoin and would not end up meeting a goal of having a substantial amount of bitcoin within 4-5 years which should be a first stage of maturity of their investment.