Does anyone know why this is the case? Surely it would drop right since the fees are outrageous and would move other people to buy other coins?
Seems like the market is telling us that Bitcoin investors don't care about rising fees. If cheap fees were important to the market, it would have a discernible effect on supply and demand.
If most people are simply holding BTC as an investment, they're not even paying fees to use Bitcoin, so it doesn't matter to them. At the same time, transaction volume is generally increasing, meaning that people still find value in on-chain transactions at these fee rates. At some point, equilibrium will be found, and transaction volume will drop due to growing fees. That will naturally cause network fee rates to drop.
You are correct, and there's a good reason why investors don't value cheap fees much and don't move to other coins that have higher capacity - investors mostly care about Bitcoin's security and decentralization features, and they know that Bitcoin is decentralized because of its big network of nodes, and that raising blocksize would result in centralization issues. Bitcoin is really digital gold, and moving gold is quite expensive, so people who are looking for decentralized currencies should use some altcoins since they don't need Bitcoin's mega security for their $100 transactions.