It seems typical on most ereaders, it's not a Kobo limitation. When I hit about 1200 books on my Sony 350, I noticed it started behaving very slow, even page turns within any one book was sluggish.
I got over the need to carry every single book I own with me and only keep around 300 books on at any time, more than enough to pick anything new to read while out, and deleting any that I've read. I use Calibre to keep all my books in one spot and even that's backed up to another drive, so no chance of losing any books.
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