The better way of managing your money is to subtract your basic expenses first rather than subtracting the bitcoin investment and emergency funds first..
Your discretionary income is the amount of money that you have left after accounting for basic and/or essential expenses... You use your discretionary income to invest in bitcoin and/or to build your emergency funds or any other back up funds. You also use your discretionary income for other non-essential expenses that you might have or choose to have.
Very true. That is actually how money should be handled, handle your main expenses first, then use what is left to build. A lot of people do it the other way round and end up stuck when something urgent comes up.
One thing I would just add is, having control over your money flow makes everything easier. Even if it is small money coming in, once you have a system, it adds up with time. I think people underestimate how far simple discipline can go.
There is no need to diversify for the sake of diversifying, and many times investors can spend many years investing without necessarily diversifying until they might later start to feel overweighted in one investment, such as bitcoin... So a person could just start out investing in bitcoin and also to get his cashflow management systems and practices in place that might involve keeping cash and back up funds.. and it could take several years to just build up the bitcoin investment and back up funds to be 3 months or more of your expenses.
And I agree with you on not rushing to diversify. There is no pressure to start buying a bunch of different assets just to look like an investor. If Bitcoin is what you understand and you are building consistently, that alone is a solid plan.