Bitcoin, the leading cryptocurrency, is once again trading in close correlation with technology stocks, according to a report by Bloomberg released on Friday. The 90-day correlation between Bitcoin and the tech-heavy Nasdaq 100 index has surged to 0.46, its highest level in almost a year. This increasing correlation challenges the often-touted narrative of Bitcoin as a portfolio diversifier distinct from traditional equities.

Earlier this year, Bitcoin's correlation with stocks had declined significantly, even turning negative in April, according to Jurrien Timmer of Fidelity. Historically, the correlation between Bitcoin and equities fluctuates based on macro-financial conditions. For instance, it reached as high as 0.50 in May 2022 and spiked dramatically in 2020 during the era of quantitative easing (QE).

The recent alignment with tech stocks comes as major U.S. stock market indices reached record highs following the latest Consumer Price Index (CPI) report, which indicated declining inflation in the U.S. Bitcoin has similarly rebounded, reclaiming the $67,000 level and hitting its highest price since early April.

The renewed bullish sentiment is driven by Wall Street's belief that the U.S. Federal Reserve might cut interest rates multiple times this year. Lower borrowing costs are generally favorable for risk assets like stocks and cryptocurrencies. However, there is caution among investors, as the Federal Reserve has yet to fully address inflation concerns.

Earlier today, U.S. Federal Reserve Governor Michelle Bowman predicted that inflation would likely remain elevated "for some time." Bowman also emphasized her willingness to hike rates if necessary, indicating that investor optimism regarding rate cuts might be premature.

In summary, while Bitcoin's increasing correlation with tech stocks highlights its sensitivity to broader financial market trends, it also underscores the complex dynamics at play in the cryptocurrency market. As macroeconomic conditions evolve, Bitcoin's relationship with traditional equities will likely continue to be a focal point for investors and analysts alike.