I don't think any smart person will even consider selling his Bitcoin with the intention of investing the proceed in another business under the guise of diversification. That sounds irrational to me because I feel Bitcoin is among the best investment instruments I have seen. When people talk about diversification, what I understand is a situation whereby an invest set a target to achieve in Bitcoin investment say 1BTC or 10BTC, as the case maybe and after this has been achieved, the investors might decided to consider investing new cashflows at his disposal into another sector entirely such as stocks, real estate, agriculture or any other. This way, there will be no conflict in the wealth building process because it is well planned with the targets clearly defined. What I do not like is people investing in shitcoin and call it diversification; it is the same sector of which Bitcoin is the best among them.
I have a nice future plan about diversification such that when I hit my target in terms of Bitcoin accumulation, I will start investing massively in agriculture because farming is one thing I have passion for, to be able to grow my own food as well as profit from it. So this is a future plan due to limited financial resources, hence I have to establish my Bitcoin portfolio first before I start focusing on this long term dream.
Diversification is often a misunderstood strategy, while in theory it can generate greater long term profits, since by investing in several different assets their reactions to different market conditions will be different, and on average they could produce a higher performance, diversification is not really the best strategy to maximize your returns and it is better used as a strategy to reduce the volatility of your portfolio.
However this begs the question, if an investor wants to diversify their portfolio what is the best way to do it? And this reminds me of this quote by Thoreau: “Read the best books first, or you may not have a chance to read them at all.” As I believe it applies to investing as well, if we were to suppose you were interested in holding 10 different kind of assets, which one should you prioritize? The one that you consider to be the best, there is no point on trying to accumulate those 10 assets equally when you do not have enough of the best asset on your list, so whether you consider bitcoin the top asset on your list of assets to hold or it is the next best asset still to be accumulated by you in enough quantities, more bitcoin needs to be accumulated relentlessly until your goals are achieved, and only then you can move on to accumulate other assets in an attempt to diversify your portfolio even further, as if things are not done this way, you may not have a chance to get enough of the best asset on your list if you delay things up.