I don't think that "diversify" is used with the correct economic meaning, because to diversify you need independent assets, and cryptocurrencies are not. Let me try to explain my thoughts.

To diversify you typically want to invest in assets that are independent and with a similar expected return. Only if they are independent you're really reducing your risk or, said in another way, the more independent they are, the more you're reducing your risk.

Cryptocurrencies are far from being independent, you can easily tell by charting them together, e.g. https://priceeth.github.io, so I don't think you're really reducing any risk.