$BTC
Let me give you an example. Imagine one trader opens a long position at 108,000 and another opens a short position at the same price. The long position has a liquidation price at 106,000, while the short position's liquidation price is at 110,000.
In a bullish market, where the price is trending upward, once the price reaches 108,800 and the long trader closes their position, the market continues moving toward 110,000. This happens because buyers are taking profits, and there are no significant opposing orders to slow down the momentum.
There’s no real resistance above — the pressure is on the bears. Since the short positions are at risk, they start getting liquidated or hitting stop-loss levels. When that happens, the bears’ funds are used to cover part of the profits for the previous long positions, and the rest goes to the exchange.
Do you see the logic? In this scenario, I exited my long position partway through, but the price kept rising. So, if we apply this reasoning, entering short positions in a bullish trend is risky — most of them will get liquidated before hitting their target.