It's still a good strategy after all. It has never gone wrong to put most that they have to BTC and if they want to really diversify then it's holding ETH that should come next. But little did they know, if they are going to diversify even more, the balance wil be gone on that portfolio. They're making a huge mistake and you're right about that. There are more altcoins now and the choice is becoming harder for them because they're too confused of what altcoins that they have to diversify with. But we say, they don't have to diversify a lot and go with the traditional holding of these known cryptos in the market and so that they don't have to think a lot about it.
Diversification is a good strategy when used correctly, but most people apply it wrong and that is why the results are terrible. Bitcoin is the diversification from most things you may have already. If you can find one or two more great alternatives then sure diversify reasonably. But if you don't have great alternatives, don't force diversification thinking that you are a smart ass. This is what leads to losses.
That is right that they are doing it wrongly. Because what diversification means to them is to invest in as much as many altcoins that they can. Even with no volume, they're going to buy and hold that because that's what it means for them. And I agree with you that there is no need to forcing ourselves in diversification because if it's working for you to invest only with bitcoin, that's good. If you're only for ETH that's good as well, so whichever comes first and what is working for us, we don't have to force ourselves to be just like others if some other strategies or way of diversifying works for them.