I certainly agree with you that most traders who change their mindset and later focus on investment after series of losses, majorly because they've learnt a bitter lesson
You're right but sometimes they might also want to diversify which is by going into crypto investment, and still continue with thier trading. And of course this is how must traders do, so that should incase they experience lose in trading Maybe they can be able to recover it through thier long term investment. I have an idea about a trader who have been making use of this method, And of course as a trader is very good to diversify since we don't have a guarantee about the outcome.
You are getting the meaning of diversifying wrongly. When we talk about diversifying, it means that you want to channel the money that you are using to invest in bitcoin into another asset of different line. For instance, I have accumulated more than enough bitcoin and I feel that I am not safe enough with only my bitcoin investment, I diversify the money that I am supposed to use in buying bitcoin into investing in bonds, stocks, cash equavilents and properties for better security on my side.
Anyone trading and using his profits to invest in bitcoin is not diversifying, but doing both trading and investing at the same time. Trading is not the best way to use to increase the size of your bitcoin because you are gambling and your profits is under probability.
in addition diversification can aslo help manage risk of spreading investment across different assets classes reducing dependence on a single investment and also it is know for reducing portfolio volatility, as different assets may preform differently in various markets conditions.