Yes, diversification does not mean that the investor has to invest in Bitcoin along with other cryptocurrencies or gambling tokens. Diversification is done to reduce the risk. Not putting all the eggs in one basket, but in different baskets. But when he keeps his assets in shitcoin, his attention to Bitcoin will be lost. After holding shitcoins for a long time, when he loses that money, his greed will also affect his Bitcoin investment later. This will destroy his long-term dream of investing in Bitcoin. For diversification one can also keep his assets in real estate or any other platform, but when he keeps them in shitcons, he can be cheated at any time.
Diversity simply means to share your assets so you don't have only Bitcoin on your portfolio and I would prefer doing that on some coins that have proven to be trusted because like you said some altcoins that you might divide your assets to might get you all worked up, personally for me I think am okay with having to buy Bitcoin on a steady with the certainty that I don't have to go through any drama with making mistakes on following up on the wrong altcoin.
This is dangerous if you must know as it represents what every investor must avoid as it will simply lead to losses on the long run. How can you spread your capital to different shitcoins and call that diversification? Bitcoin is enough for anyone to invest in because when you have your money in bitcoin, you have rest of mind that your money is not going to evaporate before your eyes. My understanding of diversification is that you take part of your investment money to other things that is not related to bitcoin, it could be stocks, real estate or anything but definitely not shitcoins since bitcoin is the best you can bet in that space.
There have been several comments of people who lost their capital doing this exact diversification to shitcoins. They still regret it because it was a mistake putting a good proportion of their capital into shitcoins when they would have just held bitcoin and would have been happy their bitcoin portfolio have grown so big. Don't encourage people to diversify into shitcoin because the risk is just too high and not worth taking.