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This is not an asset, it is a currency. Asset values do well when investors buy-and-hold for the long-term. Currencies die that way - they increase in value when they are traded, i.e. transacted in. A high ratio of buy-and-hold investors to merchant activity in a currency is a sign of speculative build-up. Paradoxically, the attractiveness of a currency to trade in is partially a function of how well it holds value - price level volatility bodes badly for that cause.

As a financial market participant, yes, it is surprising that the Bitcoin market stabilised as quickly as it did since it suggests there was an influx of asset and currency owners willing to trade their value into Bitcoins despite the risk of rapidly losing that value in price level volatility. Having examined some AML flow of funds data I can say this resilience has nothing to do with the zeal of the Bitcoin community, which in terms of wealth is insignificantly tiny, and everything to do with its adoption in trades deemed, shall we say, unsavoury by the world's legal authorities. As a supporter of further sophistication in the Bitcoin markets myself, this sentiment of seeing nothing awry in the Bitcoin/USD volatility is worrying, though the faith expressed in the currency is reassuring (these are, after all, fiat currencies).

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