• Bitcoin CMI rebound to 0.6 suggests early upside as sentiment and valuation metrics improve.
• Excessive short positioning could fuel volatility if accumulation gains momentum.

Bitcoin’s [BTC] Combined Market Index (BCMI) has rebounded sharply, with its 7-day SMA rising to ~0.6—an early signal that market sentiment may be shifting toward cautious optimism.

This recovery comes as profit-taking slows and core on-chain metrics improve. Of course, the long-term picture looked more restrained.

The 90-day SMA held steady near 0.45, indicating the market remains in a neutral state, far from the overheated zone. 

Now, with profit-taking slowing and on-chain fundamentals stabilizing, the question is whether this bounce has legs—or is just another fakeout.

Bitcoin sharp drop in NVT metrics reflects valuation reset

The NVT Golden Cross plunged by 78.68% to 0.29, a significant shift that indicates the market may have exited a local top. 

At the same time, the standard NVT Ratio fell by 13.1% to 27.37, pointing to stronger transaction volume relative to market cap. 

These declines reinforce the idea of a valuation reset and hint at improving organic network activity. Therefore, while prices remain subdued, the underlying value proposition is strengthening. 

That makes the BCMI’s uptrend feel less artificial and more grounded in improving fundamentals.

Exchange Reserves show light accumulation amid low conviction

Bitcoin’s total Exchange Reserve dropped by 1.36% to $263.45 billion, indicating slight outflows. Historically, decreasing reserves imply accumulation, as coins move off exchanges into long-term storage. 

However, the scale of outflows remains modest, suggesting market conviction is still low. That, once again, matched the muted tone of the 90-day BCMI SMA.

So, while accumulation may be starting, it is happening cautiously. More pronounced reserve drops would be needed to confirm a stronger recovery phase underway.

Bitcoin short dominance could trigger volatility if sentiment shifts

As of the 29th of May, the Long/Short Ratio decreased to 0.886, with short positions comprising 53.01% of the total. This indicates that traders are still leaning bearish despite improving sentiment signals. 

When shorts dominate in such conditions, it raises the risk of a short squeeze if the price unexpectedly moves higher. 

Therefore, while the BCMI rebound reflects better sentiment, this short-heavy positioning could amplify volatility in either direction. 

If buyers regain control, the resulting squeeze could push Bitcoin beyond $110K rapidly.

Is the BCMI rebound the beginning of a real recovery?

Possibly.

The BCMI’s sharp 7-day rebound, paired with improved NVT ratios and modest reserve outflows, points toward early accumulation. 

However, stable long-term metrics and prevailing short positions suggest the market remains cautious. 

A sustainable recovery may be forming, but the signal still requires confirmation from stronger accumulation and price momentum.

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