That applies if you have enough money to invest, but if you're aiming for higher returns, then high-risk investments are the way to go. Some investors still choose to diversify, but they do it within the market itself , for example, they might put 50% of their portfolio in bitcoin (less risky asset), and then spread the rest across different altcoins (high-risk assets).
I don't know what to call a 50% allocation to bitcoin and 50% to altcoins, but I don't think it's diversification. As I understand it, the main goal of diversification is to reduce risk but allocating all capital to crypto doesn't seem to help us reduce risk. Because the whole market is completely dependent on bitcoin, so how can investing in altcoins be called diversification?
Diversification is only true when we invest in unrelated assets/investments like stocks, cryptocurrencies, gold, real estate...
Definitely, I agree with you. Notwithstanding anyone's projections on Bitcoin and other cryptos, it is always advisable to have some sort of diversification...