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 shitcoins, he can be cheated at any time.
Yes!.. Diversification can be a means to reduce investment risk but not with shitcoins cos with them you’re increasing your risks in hopes of high gains which may not happen. The concept of not putting all your eggs in one basket is not applicable here because it is better to put all your eggs in one basket (Bitcoin) than to put in different baskets (shitcoins).
If an investor wishes to diversify, he can look into Real Estates, Gold or even stocks n Tech. There is no known shitcoin that has a long term value that you can hodl in hopes of making sufficient profits.