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Stocks gained on Friday as US payrolls beat estimates, improving sentiment in an equity market that just one day prior suffered its biggest loss in six weeks.

The S&P 500 rose 0.7%, while the Dow added 0.5% and the Nasdaq surged 1.1%. The Nasdaq, heavily weighted toward mega-cap tech stocks, has been a lightning rod for volatility in recent weeks, and Friday's trading was another example of that.

First up, the scoreboard:

• Dow: 21,419.12, +99.08, (+0.47%)
• S&P 500: 2,426.27, +16.74, (+0.70%)
• Nasdaq: 6,157.53, +68.03, (+1.12%)
• US 10-year yield: 2.39%, +0.02
• WTI crude oil: $44.22, -1.30, -2.86%

1. Jobs report beats big, unemployment rate climbs. The US economy gained 222,000 jobs in June, many more than expected. Meanwhile, the labor-force participation rate indeed increased to 62.8% from 62.7%.

2. Markets are overreacting to 'huffing and puffing' central bankers. Investor anxiety is creeping higher amid tightening monetary conditions, and Bank of America Merrill Lynch doesn't necessarily agree with that reaction.

3. Bitcoin and Ethereum are 'cannibalizing' gold. So says Tom Lee of Fundstrat, who thinks thinks that the growing preference for the cryptocurrencies over gold is actually helping contribute to the torrid gains in the fledgling products.

4. Everyone's scared of the wrong thing when it comes to the Fed's plan for its $4.5 trillion balance sheet, according to David Rosenberg. He says that when the inevitable unwind happens, it could catch traders in both the bond and stock markets off guard

5. Blue Apron is trading at half what it hoped to get in its IPO — a week after its debut. The most cited is the fact that, while Blue Apron was trying to drum up interest in its offering, Amazon struck a deal to buy Whole Foods. 

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Investors have cash to burn right now, and based on the astronomical performance of cryptocurrencies like bitcoin and Ethereum, that's where a lot of it is getting funneled.

This is coming at the expense of gold, says Tom Lee, the managing partner and head of research at Fundstrat Global Advisors. In fact, he thinks that the growing preference for the cryptocurrencies over gold is actually helping contribute to the torrid gains in the fledgling products.

Bitcoin is up a whopping 172% percent this year, closing at $2,607.02 per coin on Thursday. Ethereum has skyrocketed 3,200% over the same period, sitting at $266.01.

One main factor driving demand for cryptocurrencies is the reduction in supply that's been seen in recent months, according to Lee. He notes that the rate of bitcoin units added has been more than halved over the past year, to 4.4% from 9.3%. With mining slowing down, bitcoin won't reach its theoretical maximum number of units until 2045 or later.

Meanwhile, Lee finds that gold production has risen "sharply" since 2009, and now sits at 3,100 metric tons, the highest on record.

"Cryptocurrencies are cannibalizing demand for gold," he wrote in a client note on Friday. "Bitcoin is arguably becoming a scarcer store of value. Investors need to identify strategies to leverage this potential rise in cryptocurrencies."

So with all of that considered, how high can bitcoin go?

Fundstrat's base case calls for the cryptocurrency to expand eight-fold to roughly $20,000 per unit by 2022. But in the most bullish scenario, bitcoin could reach as high as $55,000 over the same period.

"Our model shows gold’s value being relatively static against a rise in bitcoin," Lee says.

One potential wild card that may speed up investor allocation into cryptocurrencies could be buying by central banks. Bitcoin currently has an aggregate value of $42 billion right now, and if that climbs above $500 billion, it's a very real possibility, according to Lee.

"Already central banks have looked into this possibility," Lee says. "In our view, this is a game changer, enhancing the legitimacy of the currency and likely accelerating the substitution for gold."

SEE ALSO: Markets are overreacting to 'huffing and puffing' central bankers

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Poland's central bank said today that investors and banks should avoid dealing with digital currencies like bitcoin and ether.

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Welcome to Finance Insider, Business Insider's summary of the top stories of the past 24 hours. 

The US economy gained 222,000 jobs in June, many more than expected, according to a report from the Bureau of Labor Statistics on Friday. Economists had forecast that nonfarm payrolls increased by 178,000, according to Bloomberg.

Labor force participation ticked up, and wage growth missed expectations. The gap between white and black unemployment in America is now at a record low. North of the border, Canada added more jobs than expected in June, although most were part-time positions.

Berkshire Hathaway Energy said Friday that it agreed to acquire Energy Future Holdings for $9 billion in cash, a purchase that would eventually hand it the electric-utility giant Oncor.

Irene Rosenfeld, the CEO of Mondelēz International, doesn’t seem interested in buying Nestlé’s candy business. She also explained what it's like to be targeted by Bill Ackman and Nelson Peltz.

And we got the play-by-play account of how Amazon's takeover offer for Whole Foods went down.

Markets are overreacting to "huffing and puffing" central bankers, according to Bank of America Merrill Lynch. And everyone's scared of the wrong thing when it comes to the Fed's plan for its $4.5 trillion balance sheet, according to David Rosenberg. 

Bitcoin is sliding. And a top exec at one of America's oldest banks explained why Ethereum holds so much promise.

Missouri's governor says raising the minimum wage will take "money out of people's pockets" — so he's lowering it. US Secretary of Energy Rick Perry flubbed one of the most fundamental lessons of modern economics. And the huge gap between America’s rich and super-rich exposes a fundamental misunderstanding about inequality.

New emails show how mistrust and suspicions blew up the relationship between Uber's Travis Kalanick and Google's Larry Page. Tesla's bloodbath racked up a $1.4 billion profit for short sellers in just three days. And Volvo's all-out assault on Tesla's turf is as much about its future as its past.

Lastly, Goldman Sachs president David Solomon is selling his enormous Aspen estate for $36 million.

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Bitcoin is flirting with a break below $2,500 a coin. The cryptocurrency trades down 3.7% at $2,510 and is threatening its lowest close since June 27. It's rival, ethereum is also under pressure, down 8% at $244.

Friday's slide comes amid a relatively quiet week for bitcoin. It's price has been locked in a range between $2,474 and $2,639 since Monday. That's the day when Sheba Jafari, the head of technical strategy at Goldman Sachs, warned in a note to clients that bitcoin could fall as low as $1,857 before surging as high as $3,915.

Recently, there has been a bit of skepticism surrounding the cryptocurrency. Back in early June, tech billionaire Mark Cuban said bitcoin was a "bubble." He tweeted, "I think it's in a bubble. I just don't know when or how much it corrects. When everyone is bragging about how easy they are making $=bubble."

Last week, Jeffrey Kleintop, the chief global investment strategist at Charles Schwab, suggested bitcoin was in a bubble unlike any we had ever seen before. 

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Cryptocurrencies have been red-hot lately. The price of bitcoin and an ether token, for instance, have been on a tear and are up 121% and 490%, respectively, since April 6.

Ether tokens and bitcoin are built on a technology called blockchain. That's a kind of digital ledger that records and verifies transactions made on it. 

Ether tokens, which are built on ethereum blockchain, are newer to the crypto-scene than bitcoins, which can trace their origins back to 2009.

Mike McGovern, the new head of Investor Services Fintech Offerings at Brown Brothers Harriman & Co, one of the oldest private banks in the US, thinks one blockchain is clearly superior.

"When looking at bitcoin blockchain versus ethereum, there's no doubt ethereum is superior," McGovern told Business Insider in a recent phone interview.

Brown Brothers Harriman has been working on blockchain for five years, according to McGovern. It started with an R&D center in Krakow, Poland. 

One reason why McGovern thinks Ethereum is better is because its cheaper. 

"It doesn't cost as much to mine ether tokens, because it requires less electricity than bitcoin," he said.

McGovern's second reason relates to the original purpose of the two blockchains that power the currencies.

Bitcoin was designed to be a currency from the start. Vitalik Buterin, a Russian native and young programmer, however, founded Ethereum as a platform on which two parties could enter into a contract without a third party, according to Paul McNeal, a Bitcoin evangelist and long-time cryptocurrency investor.

These so-called smart contracts create trust between two parties. The ethereum platform is powered by ether tokens and can be used as both a currency and can "represent virtual shares, assets, proof of membership, and more." 

"Ethereum is not only cheaper than bitcoin, it is also more robust and has more applications outside of simply financial transactions," McGovern said. 

Here's a handy explanation from Nathaniel Popper, a New York Times reporter and author of Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money:

"Ethereum was designed to do much more than just serve as a digital money. The network of computers hooked into Ethereum can be harnessed to do computational work, essentially making it possible to run computer programs on the network, or what are referred to as decentralized applications, or Dapps. This has led to an enormous community of programmers working on the software."

McGovern isn't the only person who is more bullish on Ethereum. A survey recently cited by Popper in The New York Times indicates that a lot of business are singing the same tune. Almost 94% of surveyed firms said they feel positive about the state of ether tokens. Only 49% of firms surveyed had a positive feeling about bitcoin. 

MGT Capital, the company run by John McAfee, is one such firm. It said it would start to mine Ethereum  in its latest bid to turn a profit.  "We are more convinced each day of the growth and value of digital currencies, and our company is uniquely positioned to be a leading provider of processing power to relevant blockchains," McAfee said in a statement. 

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The Federal Reserve built up a $4.5 trillion fortress by buying up government debt as it dealt with that worst crisis since the Great Depression. It did this to suppress interest rates. 

Now that the economy is on a stronger footing and US banks in relatively good shape, the Fed is left with the task of unwinding all this. The minutes from the June Federal Open Market Committee meeting indicate it could begin in earnest in September, Deutsche Bank economists Brett Ryan and Matthew Luzzetti wrote in a note to clients on Wednesday. 

But of course, as widely forecasted as it is, worries about the potential impact of this have pushed Treasury yields — and therefore interest rates in many corners of the US economy — higher since mid-June. The benchmark 10-year yield has rallied from 2.12% on June 14 to 2.38% now. Wall Street is expecting the 10-year to hit 2.90% in the next 12 months as the Fed lets expiring Treasurys run off its balance sheet.  

However, when the unwind happens, it could catch traders in both the bond and stock markets off guard, warns Gluskin Sheff economist David Rosenberg. Here's Rosenberg referring to the Fed's various bond-buying programs dubbed "quantitative easing" or QE, and their impact on stocks and bonds (emphasis ours): 

In fact, when you go back and look at the announcements of QE1, QE2, and QE3, the Treasury market actually did not rally on these ... but the stock market sure did! And you know what, in those intermittent periods when the Fed stopped its balance sheet expansion (only to then precipitate the next round), the ensuing pullback in risk appetite and the correction in the S&P 500 actually caused the bond market to rally on the safe-haven effect!

This is a warning to those who believe that ending QE is going to be worse for Treasuries than equities ... on average, the unveiling of QE1, QE2, and QE3, generated an average 27.5% surge in the S&P 500 and the 10-year T-note never rallied once.

As for how it all plays out, Rosenberg sees three paths.

1. The Fed can end up tightening too quickly and create a repeat of 1937-1938, which created a double-dip as the US economy was thought to be emerging from the Great Depression 
2. It could engineer a "soft landing" like it did in 1994-1995
3. The Fed could keep rates too low for too long like it did in 2004-2006, sowing the seeds of the housing and credit bubble.  

Regardless of the outcome, Rosenberg warns, "The economy may end up being spared, but what we do know about these three prior episodes, in fact, what we know about all thirteen periods of Fed tightening in the post-WWII era, is that these cycles don't end without the financial excess of the bull market condition becoming exposed, and then expunged."

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