I understand that the market reaches this consensus through buyers and sellers placing their bids and asks on the exchanges, but WHY is a Bitcoin worth that price?

If Bitcoins were at $50 right now we would all probably think that was completely reasonable.  If they were trading at $1000 a Bitcoin we would accept that too.  Do buyers just pick arbitrary sell prices in their head, and then sellers pick arbitrary buy prices, and then the market reaches a consensus?  Does anyone actually have a good understand of this or is there no "good answer".  Thanks.