Is this a healthy thing for the growth of cryptocurrency network or is it degrading the value of the system as large number of cryptocurrencies are available with zero trading volume and without any product backing.
Wow! I didn't realize there were so many coins on the market. I never actually checked, of course, but I thought it was in the hundreds at most.
No, I don't think this is a healthy thing and yes, I do think that there will probably be at least 3500 coins and/or tokens on the market in no time. The problem is that there's not enough money or interest in most of them, and as you pointed out the worst of the worst have no trading volume and can't be sold at any price. Those are the coins which are truly dead beyond resurrection, and I'm sure there are a lot of them.
I would only buy coins in the top 50 on coinmarketcap, with few exceptions and I have stuck to that personal rule faithfully. I don't speculate in coins with valuations approaching 1 satoshi, which is a sure sign that a coin is moribund. The top ranked coins are the ones with large communities, high trading volume, and usually a relatively high price. They'll be the ones that survive the next 10, 20 years or so. The rest are headed toward the afterlife with all but one nail in their coffin.