Cryptocurrency markets have been trading within an unusually tight 5% range since March 17 as conflicting forces continue to pressure the sector. Consequently, in the past seven days, the total market capitalization gained 3.8%, which was driven mainly by Bitcoin’s (BTC) 3.6% price increase and Ether’s (ETH) 5% gain.

On March 27, the United States Commodity Futures Trading Commission sued Binance and Changpeng “CZ” Zhao for allegedly violating trading and derivatives rules, heightening regulatory uncertainty. According to the lawsuit, Binance provided access to leverage for customers trading on the spot and futures markets.

The announcement came just five days after Coinbase received a Wells notice from the U.S. Securities and Exchange Commission, which could target the exchange’s staking program, listed digital assets, wallet and Coinbase Prime services.

Similar actions also occurred outside the U.S., with Japan’s Financial Services Agency (FSA) announcing on March 31 that several foreign cryptocurrency exchanges, including Binance, Bybit, MEXC Global and Bitget, had been operating in the country without proper registration, in violation of the country’s laws.

The lateralization trend that began in mid-March has repeatedly tested the crypto market’s $1.14 trillion market capitalization support. The movement suggests that investors are hesitant to place new bets until more information on the lawsuits against Binance and Coinbase is available.

Risk markets benefited from the inflationary pressure

The global banking crisis forced the Federal Reserve to use two different emergency lending programs. As a result, the Swiss National Bank provided more than $100 billion in liquidity to absorb the impact of Credit Suisse and its subsequent sale to UBS. Stocks and commodities have benefited as traditional finance investors seek alternatives to protect against inflation.

Stocks and commodities have benefited as traditional finance investors seek alternatives to protect against inflation. Since March 15, the S&P 500 index has risen 6.6%, gold has risen 4.6% and oil prices have gained 18.6%. As a result, there are compelling arguments for both an upward and downward trend within the lateral channel, which currently limits crypto’s total capitalization at $1.2 trillion.

Derivatives show mixed trends, but no use of excessive leverage

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

The seven-day funding rate for Bitcoin and Ether was neutral, indicating balanced demand from leverage longs (buyers) and shorts (sellers) using perpetual futures contracts.

Traders can gauge the market’s sentiment by measuring whether more activity is going through call (buy) options or put (sell) options. Generally speaking, call options are used for bullish strategies, whereas put options are for bearish ones.

A 0.70 put-to-call ratio indicates that put options open interest lags the more bullish calls and is, therefore, bullish. In contrast, a 1.40 indicator favors put options, which can be deemed bearish.

The put-to-call ratio for Bitcoin options volume increased to its highest level since March 9, indicating an excess of demand for neutral-to-bearish puts. This is the inverse of what happened on April 1, when call options were in higher demand.

Related: Unwinding the hyperbole: Are US-based crypto firms really being ‘choked’?

Traders are pricing low odds of a break above $1.2 trillion

The market is pricing higher odds of downside in the derivatives market. However, given the balanced demand on futures markets, traders are hesitant to place additional bets until regulators’ actions are clearer. It is unclear whether the total market capitalization will be able to break through the $1.2 trillion barrier, but professional traders are not currently betting on it.

From a derivatives market perspective, traders are pricing higher odds of downside. However, considering the balanced demand on futures markets, investors are uncomfortable placing further bets until there’s a clearer picture of regulators’ actions.

Uncertainty exists as to whether the total market capitalization will be able to surpass the $1.2 trillion barrier, but professional traders are currently not betting on this outcome.