Bitcoin (BTC 0.57%), which recently broke through the $37,000 price level, has been on a wild ride over the past two years. After collapsing by 65% last year, it is now up 122% this year and has been outperforming all but a handful of top cryptocurrencies. As a result, analysts and traders have been rushing to put out wildly optimistic price targets for Bitcoin in 2024.

But dig a bit deeper, and there are plenty of reasons it might be headed for a pullback sooner than anyone thinks. It's easy to argue that it is wildly overheating and is now primed for a market correction, especially if the economy shows signs of weakness. But don't worry about the dip too much. Two key factors make the crypto a fantastic long-term investment.

Institutional investor flows

The biggest factor supporting a higher price for Bitcoin is the potential for an enormous flow of funds from institutional investors into new spot Bitcoin exchange-traded funds (ETFs), which will likely be approved by the Securities and Exchange Commission (SEC) in the first quarter of 2024.

These new spot ETFs provide institutional investors with a way to get exposure to the digital currency without owning it directly. If institutional investors decide to allocate even 1% of their portfolios to crypto, it could have an enormous impact on the price of Bitcoin for the foreseeable future.

As a result, some analysts are projecting Bitcoin to smash through its all-time high of $69,000 and continue on an ascent to $100,000 and beyond, driven by this fresh infusion of institutional investor money. Just keep in mind, though, JPMorgan Chase (NYSE: JPM) recently warned that this impact might be less than originally thought, because institutional investors could simply rotate their money out of other existing Bitcoin investment products and into these new ETFs.

The halving

The other key factor supporting a higher price for Bitcoin is the halving, now scheduled for April 2024. This event, which takes place only once every four years, results in the reward paid out to Bitcoin miners being cut by one-half.

That event creates a "scarcity effect" that drives up the price of the crypto over time. It also has a deflationary impact on it, since the rate of new Bitcoin creation is being reduced, and that makes it more attractive as a hedge against inflation. There have been three previous halvings, and all of them have led to Bitcoin hitting new highs.

Arguably, the impact of the Bitcoin halving seems to be diminishing over time. And, of course, past performance is no guarantee of future performance. Just because the halving has resulted in three previous bullish market cycles, there's no inherent reason it has to happen a fourth time.

That being said, it's undeniable that the halving is a cornerstone feature of just about any Bitcoin price forecast for 2024. Standard Chartered Bank, for example, has raised its previous $100,000 price target to $120,000, in part based on new bullishness around the halving.

Do you believe in efficient markets?

The big question is just how much these two events -- the arrival of the first spot Bitcoin ETF and the halving -- are already priced into the hefty $37,000 price. According to the efficient market hypothesis, which argues that asset prices reflect all available information, they should be.

Bitcoin is a digital asset, but it is still an asset. Since we know the date of the halving, and we know the approximate date of the spot ETF approval, then these events should be reflected in the current price.

As a result, JPMorgan Chase argues that much of the impact of the spot Bitcoin ETF has likely been priced in. Coinbase Global (NASDAQ: COIN), too, seems to agree. And there are plenty of investors who think Bitcoin is poised for a recalibration in price, as the market makes sense of all available information.

In fact, Bitcoin bear Peter Schiff is now arguing that the pending approval of the first spot Bitcoin ETF product could be a perfect "buy the rumor, sell the news" opportunity.

So that's why you need to be ready for the next big dip in Bitcoin. If you don't prepare now, you could be blindsided if it happens later. I'm long-term bullish on the cryptocurrency, and based on the two catalysts described above, I'm convinced that any dip will provide a unique opportunity to buy Bitcoin at a bargain price before it continues its steep upward ascent.