Good morning. Here’s what’s happening:

Prices: After a morning surge, bitcoin spent the day in its most recent range well above $30K.

Insights: Commodity or security? Former CFTC Chair Timoth Massad says the determination can wait.

Bitcoin Ignores Inflation Data

Bitcoin seemed headed for brighter days in the immediate aftermath of a mildly surprising decline in the June Consumer Price Index (CPI) Wednesday, before retreating into the shadows it’s occupied for the better part of a month well below $31,000.

The largest cryptocurrency by market capitalization was recently trading at $30,357, down 0.8% over the past 24 hours. BTC surged in the hour immediately following the CPI release, a 3% increase that was lower than expected and down from 4% the previous month, as investors quickly lost their enthusiasm. On-chain data this morning that showed two wallets – labeled as belonging to the U.S. government and linked to seized bitcoin holdings from the Silk Road marketplace – moving 9,825 bitcoin ($301 million) in three transactions may have outweighed the positive inflation report.

With a few blips, bitcoin has been range-bound between $30,000 and $31,000 for much of the time since June 20 as investors fretted over a renewal of hawkish interest rate hikes that could cast the economy into a steep recession. Federal Reserve officials have said repeatedly that they intend on raising interest rates 25 basis points (bps) later this month after pausing a year-long diet of monetary hawkishness in June.

Those worries and often confounding macroeconomic data have trumped euphoria that bubbled up earlier in June after BlackRock, the world’s largest asset manager, and other financial services giants applied for elusive spot bitcoin ETFs. The SEC, which has rejected multiple such applications over the past two years, is unlikely to come to a decision any time soon, leaving markets unclear about the next price catalyst. Still, sentiment has turned bullish with two respected research groups over the past week that BTC could soar to $120,000 or higher by the end of 2024 and other signals, including the CoinDesk bitcoin market indicator pointing upward.

In a Telegram message to CoinDesk, Strahinja Savic, head of data and analytics at Toronto-based crypto platform FRNT Financial, noted that over the past two years, the supply of BTC that remains unmoved for more than a year has reached an all-time high of nearly 70%. “This data suggests that the dominant bitcoin investor right now is the long-term ‘hodler,’ Savic wrote. “This cohort is less likely to be sensitive to macro considerations.”

Read More: Bitcoin HODLing Has Never Been More Popular

Ether also rose after the CPI release, before dropping and was recently changing hands at $1,870, down 0.6% from Tuesday, same time. Other major cryptos were largely in the red with MATIC and AVAX, the tokens of smart contracts platform Polygon and Avalanche, down more than 4% and 2%, respectively. The Crypto Market Index, a measure of crypto markets’ performance, was off 1.9%.

Equity markets liked the sound of falling inflation better than cryptos with the tech-heavy Nasdaq Composite falling 1.1% and the S&P 500 and Dow Jones Industrial Average (DJIA) also declining. Traditional safe haven gold ticked upward slightly.

FRNT’s Savic noted stocks’ and cryptos veering path, a trend that took flight months ago. “We’ve seen a decline in correlations between bitcoin and traditional assets heading into this CPI release, and that has been a strong theme in 2023,” he wrote.

Tim Massad’s Incremental Approach to Crypto Regulation

Regulatory agencies don’t have to immediately settle whether crypto is a security or a commodity, former Commodity Futures Trading Commission Chair Timothy Massad told CoinDesk TV’s “First Mover” program on Wednesday.

Echoing a Wall Street Journal op-ed that he and former Securities and Exchange Commissioner (SEC) Jay Clayton co-authored last week, Massad said that the CFTC and SEC could create basic investor and market protection standards for exchanges through a self-regulatory organization as an incremental step before determining digital assets’ status.

“We’re very deliberately saying, we don’t have to resolve that in order to put in place some basic investor protection standards,” Massad said. “We’re not saying that’s not an important issue. It is and I don’t want to limit the SE C’s ability to say, this (crypto) is a security (and) you really have to comply. But what we’re saying is, look, we have platforms today that are trading things – maybe they’re securities, maybe they’re commodities. Put in place standards on protecting customer assets, preventing fraud and manipulation, prohibiting conflicts of interest requiring reporting and recording of information.”

Massad and Clayton’s recommendations come at a potentially pivotal time in crypto’s brief history, and amid an ongoing jurisdictional feud between the CFTC, which considers crypto a commodity and the SEC, which sees it as a security. Both agencies have filed multiple legal actions against exchanges and other key crypto organizations, testing the applicability of current regulations but leaving investors and entrepreneurs deeply unsettled about crypto’s future in the U.S., which has largely spearheaded global interest in the space. Last month, the SEC sued Binance and Coinbase, saying the exchanges had violated securities laws by, among other things, offering unregistered securities.

Read More: SEC Sues Crypto Exchange Binance and CEO Changpeng Zhao, Alleging Multiple Securities Violations

Some observers believe that U.S. overreach could shift the balance of the crypto world to cities overseas with friendlier regulatory environments, including Hong Kong, which recently made it easier for retail investors to trade, Singapore and Abu Dhabi, which is intent on becoming a global digital asset hub.

Read More: Singapore: The Center of Asian Crypto Wealth Is Ready for a Reset

Massad said that the piecemeal approach would offer at least some certainty while the various cases wind their way through the courts, and agencies continue to debate over the nature of crypto. “Cases brought by the SEC and the CFTC aren’t going to bring us to sort of comprehensive investor protection standards quickly,” he noted.

Massad said that Congress could apply the incremental standards to any platform trading bitcoin or ether, which account for more than two-thirds of the crypto market’s total value, as a sort of test. “There’s no platform out there that’s significant, that’s not trading both of those tokens,” he said. “So that’s the hook. That’s the way to say, ‘here are the intermediaries that these standards apply to without having to resolve what’s a security and what’s not a security.”

He added: “We’re going to say ‘look, that can still be litigated and let’s require these platforms to provide some basic disclosure on a token before it’s listed for trading.’ And that actually will help us determine what’s a security. You can’t really answer what’s a security unless you know is there a common enterprise behind this, are there managerial efforts that people are looking toward to increase its value? We need disclosure to figure that out?”

8:30 p.m. HKT/SGT(12:30 p.m. UTC): Producer Price Index (June/MoM/YoY)

8:30 p.m. HKT/SGT(12:30 p.m. UTC): Initial Jobless Claims (July 7)

In case you missed it, here is the most recent episode of “First Mover” on CoinDesk TV:

Bitcoin Nears $31K as Inflation Rose Less Than Expected; Crypto Oversight Bill Re-Launch

The U.S. inflation rate as measured by the Consumer Price Index (CPI) slipped to 3.0% on a year-over-year basis in June from 4.0% in May. Unchained CEO and co-founder Joe Kelly shared his outlook on bitcoin. Timothy Massad, former CFTC chairman and current director of the Digital Assets Policy Project at the Harvard Kennedy School discussed crypto legislation being re-launched by Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.). And, Alliance DAO senior researcher Will Robinson weighed in on the future of Web3 gaming.

Silk Road–Linked Bitcoin Worth $300M Moved by U.S. Government: On-Chain Data: The U.S. government previously sold 9,861 bitcoin for $216 million in March.

Google Play Changes Policy on Tokenized Digital Assets, Allowing NFTs in Apps and Games: The company is opening up the ability for developers to let users buy, sell or earn digital assets in apps as long as they maintain transparency and adhere to other rules.

Elon Musk’s New ChatGPT Competitor Boosts AI-Related Crypto Tokens: Tokens such as AGIX and FET saw modest bump after Musk announced new Artificial Intelligence (AI) company “xAI” to take on ChatGPT.

Circle Cuts Workforce, Ends Certain ‘Non-Core’ Activities; Will Continue Hiring Globally: While some departments were subject to layoffs, the stablecoin issuer will continue to hire in other areas.

Even as Inflation Risk Fades, Bitcoin Remains Stuck Below $31K: Wednesday’s CPI report showed sizable decelerations in both overall and core U.S. inflation, which one might’ve thought would drive BTC’s price higher.