$BTC Let’s break down a simple example to illustrate how liquidation mechanics work in a bullish market.
Imagine two traders, each entering opposing positions with $108,000 — one goes long, and the other goes short. The long position has a liquidation price of $106,000, while the short position gets liquidated at $110,000.
Now, consider the market is bullish. As the price climbs to around $108,800, the long trader decides to exit and secure profits. What happens next?
Since the overall momentum is upward and sellers are limited, the price continues to rise. There’s no significant resistance above, because the short positions are now under pressure. In fact, the only real “pressure” is on the bears. As the price moves closer to their liquidation or stop-loss levels, their positions are forcefully closed, releasing capital that partially goes to fund profitable trades — like the earlier long — and the rest goes to the exchange.
This explains why, in bullish markets, price often accelerates through resistance levels — not because of new buying, but because of liquidated shorts fueling upward momentum.
So here’s the key takeaway: in an uptrend, entering short positions too early or too often is risky — most of them get wiped out before price ever pulls back meaningfully. Timing and understanding liquidation dynamics are crucial to navigating such conditions.$BTC