In the world of crypto trading, understanding how positions and liquidations work can help you stay ahead of market moves. Let’s break down a simple scenario using Bitcoin ($BTC ) to illustrate why shorting in a bullish market can be a losing strategy.
Imagine two traders:
One goes long (bets price will rise) with $108,000.
Another goes short (bets price will fall) with the same amount.
The long position’s liquidation price is $106,000, while the short position’s liquidation price is $110,000.
Now, assume the market is bullish — trending upwards. When the price reaches $108,800, the long trader decides to exit and take profits. Since the momentum is still upward and there's no strong selling pressure, the price keeps rising. Why?
Because in a bull market:
Buyers (bulls) take profits as the price climbs.
Sellers (bears) have their positions liquidated as the price nears their stop-loss or liquidation levels (in this case, near $110,000).
When shorts are liquidated, their capital is used to cover their losses, which ends up supporting the rising price further. A portion of those funds go to the opposing long trader (if they’re still in the trade), and the rest goes to the exchange.
So, even though our long trader exited early, the price continued upward — driven by the pressure on short sellers.
Conclusion:
In a bullish trend, short positions are constantly at risk. The higher the market climbs, the more shorts get liquidated, fueling further upward movement. That’s why entering short positions in a strong uptrend often leads to losses — they’re “buried” before t
he price ever falls back.