The development of lithium-ion batteries has experienced massive progress in recent years. Battery aging models are employed in advanced battery management systems to optimize the use of the battery and prolong its lifetime. However, Li-ion battery cells often experience fluctuations in battery capacity and performance during cycling, which makes capacity prediction more difficult. Moreover, the reason for the capacity regeneration phenomenon occurring after resting periods is not clear yet, as well as the influence of cycling conditions on capacity regeneration. A relationship between this phenomenon to cycling state of charge (SoC) ranges and current rates was investigated in this paper on a battery cell with Lithium Nickel Manganese Cobalt Oxide positive electrode. Experimental results show that the capacity increase is a consequence of decreased internal impedance after the resting period. The experiments also showed that a significant power drop and subsequent power regeneration after a resting period occurs only for specific SoC ranges, and applying a resting period after battery cycling can mitigate this power fading process. The semi-empirical model of battery degradation including capacity regeneration is proposed in this paper based on physical processes inside of the cell retaining low computational requirements. The acquired results can be utilized in battery management systems for more accurate state of health estimation and to prolong battery lifetime.