Bitcoin (BTC) is currently experiencing a mix of positive signals and uncertainty in the short term. Moody’s recent downgrade of the US credit rating has strengthened the long-term positive sentiment surrounding BTC, highlighting its role as a hedge against increasing debt and fiscal instability.

Recent data indicates a decrease in the supply of Bitcoin held on exchanges, suggesting that investors are more inclined towards holding rather than selling. Despite these encouraging indicators, BTC is currently undergoing a period of consolidation in the short term, requiring a new surge in momentum to break higher.

Moody’s decision to downgrade the US credit rating from Aaa to Aa1 marks the end of the country's longstanding top-tier credit rating streak among major agencies. This move is attributed to factors like rising deficits, mounting interest costs, and the absence of credible fiscal reforms.

The downgrade prompted a swift market response, with Treasury yields rising and equity futures declining. The White House dismissed the downgrade as politically motivated while still engaging in negotiations for a $3.8 trillion tax and spending plan.

Moody’s cautioned that extending previous tax cuts could further exacerbate deficits, potentially reaching 9% of GDP by 2035. This scenario could enhance the attractiveness of cryptocurrencies, particularly Bitcoin, as a safeguard against long-term fiscal uncertainties.

Following a brief uptick in Bitcoin supply on exchanges between May 2 and May 7, the metric is once again on a downward trend, currently standing at 1.41 million BTC. A diminishing exchange supply typically indicates reduced selling pressure, signifying a positive market sentiment.

The Ichimoku Cloud chart for Bitcoin indicates a period of consolidation with neutral or slightly bearish signals. The Kijun-sen, Tenkan-sen, and Senkou Span lines demonstrate a lack of strong momentum in either direction, suggesting short-term indecision in the market.

Despite the short-term consolidation phase, Bitcoin's long-term bullish case is reinforced by the recent US credit rating downgrade. This event further emphasizes the appeal of Bitcoin as a hedge against fiscal instability and growing debt concerns. In the foreseeable future, more investors might turn to BTC as a safeguard against sovereign risks and diminishing trust in traditional financial systems.