Summary Bitcoin has been rangebound between $90,000-$109,000, affecting crypto-related stocks, while gold has outperformed year-to-date. I maintain a hold rating on the VanEck Digital Transformation ETF due to mixed valuation and technical trends, despite its substantial growth. DAPP's portfolio has diversified with increased large-cap exposure and a high long-term EPS growth rate, but its elevated P/E ratio poses risks. Technical analysis shows DAPP in a long-term uptrend with key support at $14, but RSI momentum remains weak, warranting caution. Bitcoin has been quiet since late November. The world’s biggest cryptocurrency soared after President Trump’s election win, but despite much de-regulatory optimism, the digital currency has been stuck in a range between about $90,000-$109,000. Not surprisingly, shares of companies that are adjacent to bitcoin and involved in crypto mining have sagged in the last few months. Of course, AI chatter is higher than ever. Today, I’m revisiting the VanEck Digital Transformation ETF ( DAPP ). I was neutral on the fund back in the second quarter of last year, and it went on to trade sideways before catapulting in advance of and through the November 5 elections. I reiterate a hold rating today given the valuation and technical trends. With a host of important earnings dates on tap, I will note key levels on the chart, all while bitcoin continues to meander under the $100,000 mark. Bitcoin has been a snoozer for 3 months now. It has been all about gold. TradingView Gold Beating Bitcoin YTD stockcharts.com According to the issuer , DAPP seeks to track as closely as possible, before fees and expenses, the price and yield performance of the MVIS Global Digital Assets Equity Index, which tracks the performance of companies that are participating in digital-asset economies. The ETF aims to invest in companies at the forefront of the digital assets transformation while offering investors diversification through exposure to exchanges, miners, and infrastructure firms. The issuer states that DAPP offers access to companies that have the potential of getting 50% of revenue from digital assets. DAPP has grown substantially since my June 2024 analysis; total assets under management has swelled from near $100 million to more than $230 million. The ETF’s annual expense ratio is moderate at 0.51% while the trailing 12-month dividend yield is surprisingly high at 3.81% care of a large year-end distribution two months ago. Share-price momentum remains strong, according to Seeking Alpha’s quantitative scoring system, but I’ll highlight a broad sideway technical price action pattern later in the article. DAPP is also a risky ETF given its exclusive exposure to the digital transformation space and a concentrated portfolio. Finally, liquidity metrics are mixed due to moderate average daily volume of less than 400,000 shares and a median 30-day bid/ask spread of 29 basis points, per VanEck. So, I would encourage prospective investors to use limit orders, particularly around the market open. Looking closer at the portfolio, there have been key changes since my previous analysis. There’s now 18% large-cap access compared with 0% last spring. Moreover, there’s a bit less mid-cap exposure and a higher weight to small-cap growth. Overall, the style box is more diversified. Unfortunately, the price-to-earnings ratio has increased given the ETF’s 47% rally since June 1 of last year. The good news is that DAPP’s long-term EPS growth rate is high, above 30%, so the PEG ratio is somewhat attractive in the face of high volatility. DAPP: Geographic Breakdown, Portfolio Details Morningstar DAPP holds a focused mix of fintech stocks. More than half of the portfolio is considered in the Financials sector while 45% is invested in shares from the Information Technology sector. In all, the top 10 stocks account for 62% of the allocation. I would also call out that there’s a notable 30% ex-US chunk, so currency swings will play a role in how the fund performs. Finally, there is a slew of earnings reports on tap that may impact DAPP’s largest holdings. DAPP: Holdings & Dividend Information Seeking Alpha Crypto, AI, and Digital Tech Earnings On Tap Wall Street Horizon Seasonally, there isn’t a lot of performance data to go off of, but DAPP has historically performed well in February and March before experiencing volatility in April. DAPP: Bullish Near-Term Seasonality, But Limited Data Seeking Alpha The Technical Take With an elevated P/E and rangebound crypto prices, DAPP’s technical situation is mixed but broadly bullish. Notice in the chart below that shares have retreated sharply from their December 2024 peak above $20. The ETF’s rally paused near the low from several years ago, so we have a key line in the sand to monitor going forward. Also take a look at the long-term 200-day moving average—its slope is positive, asserting that the bulls control the primary trend. What I don’t like, however, is the RSI momentum oscillator at the top of the graph. It has been ranging in a somewhat weak area between 30 and 50; I’d like to see it climb to new YTD highs to confirm a new price uptrend. But with a high amount of volume by price now below where DAPP trades, there should be solid support on a pullback. In the short term, $14 has been defended by the bulls while a long-term uptrend support line is seen near $11. DAPP: Long-Term Uptrend, Resistance Near $20, $14 Support stockcharts.com The Bottom Line I have a hold rating on DAPP. The ETF fell by about 30% from its late-2024 peak to the February low as bitcoin wobbled below $100,000. I see mixed risks both on valuation and with the technicals as key earnings reports roll in.
