Bitcoin held above $61,000 and ether above $1,700 on Friday, extending a rebound that took hold after a softer-than-expected U.S. jobs report cooled expectations for further Federal Reserve tightening and revived appetite for risk assets.

The move caps a volatile stretch for the largest cryptocurrency, which briefly pierced its $58,000 support on Wednesday and printed a low near $57,700 before Thursday's payrolls miss sparked a relief bounce back above $60,000.

Ether (ETH) outperformed on the rebound, reclaiming the $1,700 handle, nearly 10% off its midweek lows and comfortably clear of the $1,500 support it defended last week.

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Bad news is good news

U.S. nonfarm payrolls grew by 57,000 in June, well below the roughly 114,000 economists expected, with prior months revised lower. The downside surprise undercut the argument that the U.S. labor market is re-accelerating, said Kyle Rodda, senior financial market analyst at Capital.com.

Rates market pricing still implies a rate hike before year-end, but the implied odds fell to 77% from around 85% before the data, Rodda said. The probability of a hike this month dropped to roughly 18% from around 30%.

The unemployment rate still slipped to 4.2%, a move Rodda attributed to a decline in the participation rate rather than genuine labor market strength. The report carried conflicting signals and "potentially more noise than signal," he wrote, pointing to large downward revisions and the Bureau of Labor Statistics' growing difficulty surveying the labor market.

Flows flip positive

The read-through for crypto showed up first in flows.

U.S. spot bitcoin ETFs pulled in $224 million on Thursday, their first positive print in over a week and an early sign that dip buyers are stepping back in after roughly $2.4 billion of redemptions.

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Options markets moved to fade the stress alongside the spot recovery. Front-end implied volatility unwound most of last week's spike, with one-week at-the-money implied vol falling from the mid-40s to the high-30s, QCP Capital analysts said.

The term structure re-steepened back into contango after inverting through the selloff, and carry has flipped back in favor of vol sellers.

Protection remains bid, just less desperately, QCP added. One- to two-week downside puts still command a 10- to 13-vol premium over at-the-money, though front-end risk reversals have narrowed from panic levels.

A dovish read with holes in it

Not everyone reads the jobs data as a clean dovish signal.

Beneath the headline miss, wages accelerated, unemployment fell, and consumer spending is still running hot, a mix that looks more like shrinking labor supply than cooling demand and gives the Fed room to stay hawkish, according to QCP.

A newly minted Fed chair also has every incentive to lean hawkish early to establish credibility, and Warsh's communications so far have done exactly that, the firm argued.

Markets pushed the hike out of September and into December, but the cross-asset tape does not support a genuine pivot, QCP said. Treasuries refused to rally, with the 10-year stalling around 4.47%, near its mid-May highs, while equities were no cleaner, as the S&P 500 finished flat and the Nasdaq fell amid renewed AI-rally jitters.

The clearest dovish tell was a 2% pop in gold, which reads more as a real-rate and safe-haven hedge than growth conviction, the firm said.

Broader confirmation of a front-end dovish repricing likely still needs the July 14 CPI and July 15 PPI prints ahead of the month-end FOMC, but the flip in flows suggests spot demand is beginning to firm.

The rebound arrived a day after The Block reported that long-term holders were accumulating bitcoin beneath the surface even as ETF outflows persisted, and that Bitwise's chief investment officer said Strategy's STRC selloff was part of bitcoin's end-of-cycle dynamics.

Broader tape steadies

The wider market stayed constructive as rate fears eased, allowing investors to refocus on growth and corporate fundamentals, said Daniela Hathorn, senior market analyst at Capital.com.

U.S. equities are attempting to stabilize after a volatile fortnight, with last week's technology-led weakness fading as investors take encouragement from signs the labor market may be cooling without deteriorating sharply.

The dollar has eased from recent 13-month highs as softer employment data prompted investors to trim expectations of further tightening, Hathorn said. The longer-term outlook still favors the greenback if U.S. inflation proves persistent, but near-term momentum has softened as rate expectations turned less hawkish.

Gold and oil are both showing signs of stabilization, she added. Brent has found support around the $70 level after a sharp decline, with markets pricing in a normalization of Middle East tensions even as traders appear reluctant to push crude significantly lower.

With U.S. markets closed Friday for the holiday and liquidity thin into the long weekend, QCP said it expects volatility to stay two-way.