To diversify is also important but it depends on the way at which the diversification is taking place, some persons just have the mentality of diversify because they see others doing it without checking on themselves if they are fit to diversify, remember when you diversify you are protecting your initial investment from collapsing in future, the way you manage your investment matters a lot
As a new Bitcoin investor it is a wrong idea to reason diversification at your early stage of accumulation until you have gotten to a certain stage which you feel you can diversify, but if you are struggling to accumulate your portfolio, you are not doing well financially, it is adviceable not to diversify but keep accumulating until you can afford diversifying so that you don't end up losing both your already existing investment and your need investment.
Truly diversification is never a bad thing, it's a great idea because you are trying to not just protect your asset but you are trying to increase it from other source, the major problem about diversification is how is being done, that's where the problem lies.
Yes there are times when diversification is completely retarded (so I would say that in those situations, diversification is a bad thing in certain situations). And, diversification tends to be something to protect your assets once they are grown rather than trying to grow your assets.. Diversification does not make much sense as a reason to "grow your assets" unless you have the mindset of a trader, a gambler or someone who does not know what the fuck they are doing, so therefore you diversify in order to hedge your bets because you do not have confidence in your investment (in the topic of this thread, bitcoin).
Yeah, a lot of investors often have some sort of misconception of the concepts of diversification, especially when it involves Bitcoin. Those who are actually long term investors and have a strong conviction in the potential of Bitcoin, diversification is primarily considered as an effective way to mitigate risk once a significant Bitcoin stash has been built. The main reason why an individual would consider asset diversification as a strategic approach of growing their asset rather than protecting might be due to the fact that they really do not trust the asset or lacks that confidence in it and this is a typical example of how traders think.
Diversification in the context of Bitcoin can actually more relevant as an approach or strategy to manage certain risks that's associated with the asset when it has already reached a significant level of accumulation or have a sizable portfolio. That way, diversifying to other asset class may potentially lock in the profit they've already made from their accumulation (and not to make further profits) and also potentially reducing the exposure of the asset to market volatility.
And those investors who are still in their accumulation stage, Diversification is never the best option for them as this may potentially serve as a distraction for them rather then actually helping them as supposed, it is best that they focused more on consistent accumulation as this may be considered as a much better and effective approach when it comes to building one's Bitcoin stash. This strategy actually requires a kind of conviction in the long term potentials of the asset as well as the willingness to ride out market volatility.