Why is the Kopi Luwak the most expensive coffee in the world?

Two main reasons, the process of making it, and artificial inflation from hype of its novelty.

The process of making it involves getting coffee beans that were eaten by an Asian Palm Civet and defecated out again. Not only does this make them hard to get and limited to certain areas of the world where the Civet lives, it also makes the process rather unpleasant.

Due to the novelty of coffee made from...ahem, pre-digested beans, sellers can get away with demanding a higher price. It is also been famously sampled by wealthy people who like to show off what they can afford. Far as I know though, there is little to no scientific evidence that it tastes better than un-digested beans, because in one test, they gave coffee from digested and undigested beans in a blind taste test and no one could tell the difference.