Would there be enough money in the exchanges? Would bitcoin fail?
If every one starts selling their bitcoins for fiat,then definitely the price would crash and so exchanges would not find it difficult to pay.Such a situation has not happened in the past and i hope that such a situation would not happen even in the future.If it happens,it might be the end pf bitcoin.
Op made a mistake, you don't sell your bitcoins or other coins to exchange site, they are just middle man, you are selling to other people. Exchange earn in fees for trading, for withdrawing, from other things, but they are just in the middle, so when you sell your coins for fiat someone else have coins.
If demand goes to zero, that means that no one wish to buy any coins prices will go down and down to the zero if there is no interested buyer's, but when will that happen? Can you see that people wait dips to buy more! Crypto market is here to stay, chance for this market to touch zero value is 0.0001%, people are to interested and if bitcoin price go to 1 dollar people would buy and pish the price back up.
This is right. Exchanges are only the place on where buying and selling among traders do happen which means the main thing here is that the entire circulation of the market does really depend on demand with each user which means even theres no transaction on any exchangers it doesn't mean it will completely affect or goes to zero since they can able to transact peer to peer without the need of exchangers but its quiet hassle and to slow to consider.