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After a fast start to the year, Bitcoin (BTC 0.27%) has been in a holding pattern of late, unable to break decisively above the $30,000 mark. While Bitcoin is still up 79% for the year, it is actually down 2% over the past 30 days.

But even with this recent sluggishness, Bitcoin is the one cryptocurrency I'd buy right now. There's a lot happening behind the scenes with Bitcoin, and I like what I see. Here are three factors that I think make Bitcoin a compelling buy right now.

One of the biggest catalysts for Bitcoin is the potential for a massive influx of new money from institutional investors. In mid-June, for example, BlackRock Inc. (BLK -0.39%), the largest asset manager in the world, announced plans for a new spot Bitcoin ETF. That was followed up by similar spot Bitcoin ETF applications from other investment firms, including Ark Invest and Fidelity Investments. It's really now just a matter of when, not if, such a spot Bitcoin ETF gets approved by the SEC, and that's when the new influx of institutional money could start to happen.

Image source: Getty Images.

According to the current Bitcoin valuation model from Ark Invest, the long-term trend is for institutional investors to allocate more and more of their portfolios to Bitcoin. Ark Invest says that simply shifting the asset allocation mix for Bitcoin from 1% to 2.5% could have a dramatic effect on the crypto's future price. In the bull case scenario from Ark Invest, the percentage allocated to Bitcoin could be as high as 6.5%.

The conventional view of Bitcoin is that it is one of the most volatile assets in the financial world. While that may have been true in the past, Bitcoin is actually becoming less, not more, volatile over time. Right now, Bitcoin's volatility is approaching multi-year lows, and some traders are actually complaining that Bitcoin is not volatile enough.

While lower volatility for Bitcoin may cap some of its future upside potential, it also makes it relatively less risky. After all, volatility is really just a measure of how much an asset can fluctuate in price over a certain time period, and lower volatility means that the daily zigs and zags in Bitcoin's price could be getting smaller over time. This is fantastic news if you are thinking about holding Bitcoin for the long haul, but bad news for anyone viewing Bitcoin as a short-term speculative asset.

Finally, there's one catalyst for Bitcoin that is going to get a lot more attention as we head into the final months of the year, and that's the upcoming Bitcoin halving. Right now, the Bitcoin halving is scheduled for April 2024, and it's one of the most highly anticipated events in the crypto world. In a halving event, the mining reward for mining a new block on the blockchain drops by one-half.

That might sound like just a purely technical issue, but three previous Bitcoin halvings in 2012, 2016, and 2020 have resulted in strong price gains. The general consensus is that a halving event increases the relative scarcity of Bitcoin, while also making it more deflationary over time. Both of these are very positive signals for investors, which is why past Bitcoin halving events have been so overwhelmingly bullish.

The big caveat here, of course, is that past performance is no guarantee of future performance. We don't really know what will happen this time around, but some investors are now predicting that Bitcoin will surge past the $100,000 mark next year. For example, Standard Chartered Bank now has a revised $120,000 price target for Bitcoin, and a lot of those implied price gains are coming from the anticipated effects of the halving.

The three factors described above suggest that the overall risk-reward profile for Bitcoin may be changing. There's still plenty of upside potential, but some of the risk historically associated with Bitcoin may be disappearing. As more institutional money pours into Bitcoin, I would expect this trend to continue. Simply stated, there will be less short-term, speculative money chasing Bitcoin, and more long-term, buy and hold money investing in Bitcoin. As a result, I'm bullish on Bitcoin over the long haul. It's the one cryptocurrency I'd buy right now.

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1 Cryptocurrency I'd Buy Right Now - The Motley Fool