People hold ETH because it is a better store of value than Bitcoin or any other cryptocurrency right now. It is trending up, and people expect that to continue. There is a shortage of stable tokens which requires the current situation. Also it's not easy to spend ETH, there aren't shops accepting ETH like it is currency, and taxes are high for those who cash out into fiat. Typically people spend as little of it as possible and hedge.
One thing about Ethereum is, it's market cap is likely to go up when it switches to Proof of Stake and everyone else expects similar. So it's hard to sell it for peanuts. Whether it is a bubble? Most spaces are in a bubble, real estate, stocks, housing, so why would crypto be any different from everything else in the economy?
It's also a typical bubble. We get these cycles and have seen this before in 2011 and in 2013.
There is a difference between performance of an asset and its quality as a store of value. ETH has seen tremendous performance recently - other assets might enjoy a position as a better long term store of value.