DAPP: Lagging Bitcoin And Ether Lately, Remaining Cautious

Summary I maintain a hold rating on DAPP due to resistance at key technical levels and negative seasonal trends despite improved valuation. DAPP has outperformed the S&P 500 since February and offers exposure to digital asset transformation but remains highly volatile and concentrated. Liquidity concerns persist with DAPP, and investors should use limit orders; the fund’s high yield is not guaranteed given inconsistent distributions. While DAPP benefits from crypto’s rally, especially in ether, the late-Q3 period is historically weak, warranting continued caution for new highs. Ether has taken Wall Street by storm. The Ethereum network’s fuel, the digital asset is a medium of exchange and utility token within that ecosystem. Often considered a younger brother of sorts to bitcoin, “ETH” has taken off since notching a sharp low in April. At one point, ether was down 57% on the year, but, after a remarkable comeback, it is now up 34%. That’s above bitcoin’s strong return and better than what spot gold has produced. Tom Lee, Chairman of Bitmine (BMNR), has taken on a similar strategy as Michael Saylor, CEO of Strategy (MSTR). The Fundstrat co-founder now stands behind ether, which has perhaps prompted a fresh wave of optimism across the crypto space. The GENIUS Act was another bullish catalyst. Unfortunately, not everything linked to bitcoin and ether has gone to the moon. Today, I’m revisiting the VanEck Digital Transformation ETF (DAPP). I had a hold rating on the fund back in February , and shares are up a solid 12% since then, outperforming the S&P 500. While the valuation is more favorable, I see resistance on the chart, which keeps me cautious and sticking with a hold rating. Ether Now Beating Bitcoin & Gold In 2025 Stockcharts.com According to the issuer , DAPP 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 fund offers access to companies that have the potential of earning 50% of revenue from digital assets. DAPP is a small ETF with just $277 million in assets under management as of August 11, 2025. Its annual expense ratio is moderate at 51 basis points, while the trailing 12-month dividend yield is actually high at 3.48%. Share-price momentum has been strong for much of this year, but I will note later that the fund has pulled back from its 2025 high, despite the crypto rally. DAPP is also a highly risky product , given elevated historical annualized volatility trends and a concentrated portfolio. Liquidity can be a concern—its median 30-day bid/ask spread is somewhat wide at 17 basis points, while average daily volume is near 600,000 shares. So, I encourage prospective investors to use limit orders, particularly around the market open. For an update on the portfolio, DAAP plots along the bottom portion of the Morningstar style box, indicating its significant weight to both US and ex-US small caps. I’d call out that 22% of the investment mix is allocated to international equities, which may help from a diversification perspective. I also like that the price-to-earnings ratio has retreated to just 21.4x, likely due to more upbeat EPS expectations for companies held in the fund, now that bitcoin and ether have jumped. DAPP: Portfolio & Factor Profiles Morningstar Zooming in on the sector breakdown, you’ll find that DAPP is deep into the fintech space. The vast majority of the portfolio is invested in crypto mining firms and companies related to providing retail investors with digital currency access. Interestingly, the ETF paid out a significant $0.5808 dividend on December 24, 2024, after two years without distributions. So, the yield is not a guarantee. DAPP: Holdings & Dividend Information Seeking Alpha Turning to seasonality, we are in the throes of what’s usually a tough stretch, affirming my cautious outlook. DAPP has fallen rather sharply, on average, from August through September. I concede that there’s limited price history, so I also pulled a long-term calendar view of bitcoin performance—once again, the back half of the third quarter has not been all that kind to crypto bulls. DAPP: Weak Late-Q3 Trends Seeking Alpha Bitcoin: Often Weak in August and September Barchart The Technical Take With shares potentially more compelling on valuation, but with negative seasonal considerations, DAPP’s technical situation is mixed. Notice in the chart below that resistance is in play at the all-time high from late last year. The fund failed at testing that level during the big Q2 rally that petered out in July. Now, with a bearish negative RSI momentum divergence, the bears are trying to gain control. But take a look at the long-term 200-day moving average. It’s still on the rise despite volatile price action throughout this year and general underperformance to bitcoin (and ether, more recently). Of course, I can’t dismiss the monster rally off the April low. For now, the $15-$16 zone appears to be support, while resistance is apparent between $20 and $21. DAPP: Rising 200dma, but Below the 2024 All-Time High Stockcharts.com The Bottom Line I have a hold rating on DAPP. The crypto-tied equity ETF has more than doubled from the post-Liberation Day nadir, the bulls have their work cut out for them if they want to bring this high-beta fund to new highs amid a weak calendar stretch.

Source: Seeking Alpha