Solana price tanked over 7% on Monday as fears of the impact of the ongoing U.S.-Iran war continued to drive investors away from risk assets. Current technical signals suggest the token could be set for a downturn.

According to data from crypto.news, Solana (SOL) price fell 7% from $88.05 on Sunday to an intraday low of $81.86 on Monday, March 2. Subsequently, it attempted a breach of the $90 resistance supported by a broader market recovery, but the rally lost steam just below that mark.

On the monthly timeframe, Solana has fallen over 30%, and is down over 44% from this year’s highs.

Solana price has remained in a downtrend as network revenues have fallen. Notably, the weekly revenue generated by the Solaba network has dropped over 30% from what was recorded during mid January, data from DeFiLlama show.

The total value locked in the network has also fallen from over $9 billion recorded on Jan. 17 to $6.64 billion at the time of writing.

With both network revenue and TVL going down, investors are concerned that Solana’s explosive growth phase is over, and the memecoin fever that fueled the network is finally breaking.

Demand for the token across the derivatives market has also contributed to the downturn. Data from CoinGlass show that SOL futures open interest has scaled back by nearly 45% to $4.93 billion from its January high of $8.88 billion as traders unwind positions awaiting signs of more calmness in the global geopolitical landscape.

Solana price is also affected by the market-wide downturn in response to the ongoing U.S.-Iran conflict, which has pushed investors away from risk assets to more traditional alternatives, as they expect more volatility over this week.

The most recent trigger came after the retaliatory attack from Iran on U.S. ships over the weekend, stationed around the Strait of Hormuz, sparking a jump in oil prices. Investors are concerned this could lead to higher inflation in the U.S., which could likely force the Fed to hike interest rates or hold them steady at restrictive levels for longer.

Risk-assets like Solana tend to benefit from interest rate cut expectations and struggle when the Fed sets a hawkish tone.

Solana price analysis

On the daily chart, Solana price has formed a bearish flag pattern since the token entered a downtrend from mid January this year, before moving into consolidation over the past few weeks. Bearish flags have typically been precursors to further downward breakouts.

Other technical indicators also favour the bears. The Supertrend has flashed red while the Aroon lines have pointed downwards, with the Aroon Down at 50%, indicating that sellers still maintain firm control of the market.

Hence, Solana price risks dropping to the Feb. 6 low of $70 if the current bearish momentum prevails, especially considering the broader downturn. 

On the contrary, a rebound above $90, a resistance level that the token has struggled to break multiple times over the past few weeks, could offer the necessary optimism for a rally towards the $100 psychological resistance level.