Bitcoin has still lost nearly 27% since the beginning of 2026.
Fundstrat said part of Monday's increase appeared to come from traders closing bearish positions rather than a broad change in market direction.
Open interest in perpetual futures, which measures outstanding positions in the derivatives market, had risen sharply heading into Friday evening. Coin-denominated open interest subsequently fell around 8% while Bitcoin's price increased, according to Fundstrat.
That combination suggests some traders betting on further declines closed their positions as Bitcoin moved higher.
Similar periods of short covering occurred in early June and early July, initially pushing Bitcoin higher before the gains faded. Fundstrat's base case is for a similar pattern this time, although Farrell described the latest price action as constructive.
The recent lack of volatility stands out after a difficult year for cryptocurrencies. Bitcoin has struggled to establish a sustained recovery and recently dropped below $63,000 as U.S. spot Bitcoin exchange-traded funds recorded renewed withdrawals.
ETF flows have become an important measure of demand since spot Bitcoin funds opened the cryptocurrency to a broader range of institutional and traditional investors.
One potential trigger for a larger Bitcoin move could come from the U.S. bond market.
Fundstrat pointed to rising long-term real yields as a possible source of pressure on Bitcoin and other risk assets. Real yields measure the return investors receive from bonds after accounting for inflation.
Higher real yields can make interest-bearing assets more attractive relative to investments such as Bitcoin, which does not generate interest or cash flow.
Long-term Treasury yields have remained elevated even as recent U.S. inflation data has reduced expectations that the Federal Reserve will raise rates at its September meeting.
If real yields continue rising, Farrell said they could provide the catalyst that ends Bitcoin's unusually narrow trading range.
Other factors could also determine the direction of the eventual move, including spot ETF demand, Federal Reserve policy expectations and broader investor appetite for risk.
The historical numbers themselves provide no prediction about where Bitcoin goes next. A 30% increase from around $63,000 would put Bitcoin near $82,000. A decline of the same size would take it toward $44,000.
