You are also overlooking risk/reward. If someone puts $100-1000 into some dinky alt hoping it'll turn into ETH years from now, so what? That's a risk they feel worthwhile and isn't so much as to really hurt their finances... yes, most likely they will lose, but if they win, they win big. So who is to tell them they are wrong?
Ethereum was not a dinky alt BTW, it was a truly innovative concept, flawed tho. I can't think of any serious innovation of that scale at this time.
Also people seem to be basing a lot of hopes the assumption that the hypothetical next altcoin rally will follow the same pattern as the previous one, for example some sub-$1 coin will moon to $1400 and everyone holding a few thousand of those will become instant millionaires. I think a bigger chance is that the next rally, if there is one, will play out completely differently. Maybe a completely new concept, some quantum coin maybe

, will blow everything out of the water. Maybe some regulatory pressure will force coins to switch to some specific technologies, and those that do will boom, others will fail.
The point is, the chance of "winning" in this market is worse than the chance of "winning" gambling with OTC penny stocks.
Hey, folks gamble with actual lottery tickets, so if they want to gamble with a longshot alt, so be it. I don't think anyone here is under any delusion that the odds aren't against them, nor think their current #1000+ ranked coin is a sure thing to hit the top 5. I'm also not sure that many are basing their hopes that the next altcoin rally will repeat like the last one did. Perhaps those holding longshot coins think that. I won't say they are absolutely wrong, but personally I think the odds are extremely, extremely unlikely.
But could BTC dominance decrease if BTC falls below 7K and it spurs on a mini-altcoin recovery? Sure, I see no reason why not. It's actually been decreasing since you started this thread.
Would I tell folks to chomp up alts for this possible mini altcoin season as btc falls? Of course not. Same way I wouldn't pretend to be an expert and tell them it's nearly impossible to occur and to run for the hills, sell everything into btc. It's all guesswork -- the one thing we can learn from crypto and its history is that there are no such things as experts and nobody has a clue where the markets will go.
If we look at your advice, we can already see it was incorrect -- folks shouldn't have sold their alts into btc, they should have sold both alts and btc into fiat. But that's just an example of nobody knowing how this will play out.