I think the market is oversaturated at the moment. People don't need these thousands of projects.
I agree that there are too many projects in the market but some people think that only bitcoin is going to remain and to me that is not correct we need several projects so even the bitcoin developers feel the pressure to improve bitcoin and they do it as fast as they can, because if only bitcoin remains the developers are not going to be in any kind of hurry to implement any improvement.
We wont any have choice but to look up for another project which would patch up Bitcoins lacking capability. 2-3 coins or projects is already enough on my own view.
Theres no need for it to be thousands just like on what we are seeing now. We might see many but majority are just copycats so it doesn't really need or necessary at all.
Due to easy money making with crypto this is why we are seeing these kind of numbers.
We do not need thousands of coins but just 2 or 3 coins is not enough either, we need as many ideas as possible being tested, many are going to fail but some of them will become successful, but it is not like as we have a choice many developers will try their luck with cryptocurrencies even if they know their abilities will never allow them to create a successful cryptocurrency.