"It is one of the great paradoxes of the stock market that what seems too high usually goes higher and what seems too low usually goes lower" - William O'Neil
But as others pointed out, bitcoin & cia is no longer a crazy idea from Internet. It is now a deeply studied idea that has been around for quite a long time, so people started to trust in it, and after all, this is mainly a matter of confidence.
If exchanges are not maintaining good security practices, it will happen sooner than later.
It is nowhere near stable: https://twitter.com/sama/status/791754651506909186
Same sentence applies to fiat currency too although there is so much interest in keeping those stable that they are unlikely to tank.
Demand for fiat currencies is at least generated by legal tender laws (you need it to pay taxes). Demand for bitcoin is at least generated by the need to publish some information in a global immutable distributed censorship-proof table. Those two sources of demand are the fundamental ones (I would say intrinsic). There definitely are more. Some demand is for example generated by "store of value" function or "medium of exchange" function. These functions emerge as secondary functions when a commodity is selected by market for its favourable properties.
So I would disagree that "bitcoin is not backed by anything". You might have written "I don't see the intrinsic value backing bitcoin" or "bitcoin is not backed by anything tangible". Those statements would be correct.
Specifically from countries that are removing bills like India or Venezuela.
Years ago you had to buy dollars or gold but Bitcoin is somewhat opaque to that governments because there is yet very little people involved
However, It is true that as time goes on, volatility reduces. high price makes it harder to fluctuate as quickly, and as new bitcoin continue to get mined, the volume increases as well.