I wouldn’t say that Fiverr is “overcrowded”, there’s plenty of room for many more sellers. What I will say, though, is that there are a lot of “new” sellers who have absolutely no clue how to run a business, and are expecting this to be easy, and have everything done for them. That’s just not how business works.
More often than not, many of those same “new” sellers have little to no interest in learning how to be successful. They just want the sales profit, without having to do any work to earn it.
I find that sad, and disheartening. More people would succeed here, if they only had the heart, mind, and motivation to work hard, obtain business/sales skills, and earn that success.