"Smoothed" BTC ?

[starspirit]

If the asset were free floating in price, there would be an arbitrage between the moving-average asset (MAA) and BTC, as these can be shown to converge over time. This would ultimately force the price of MAA to the BTC price, and effectively become a close substitute, with similar volatility. So the MAA price would need to be pinned to the moving average in some way, which would then dry up liquidity. e.g. If MAA < BTC, there will be lots of buyers of MAA but nobody selling. Converse if MAA > BTC. I'm pretty sure this idea cannot be implemented without a major tradeoff somewhere.

[Atad]

I've been thinking about a tradeable asset that I have not found a discussion for  and which would be very appealing for conservative long term BTC investors (hodlers) who  dislike volatility as well as cautious shorts. It also seems easy to implement in Bitshares.  The idea would be that the asset would track the moving average (i.e. for 1 year) of BTC value instead of BTC value itself. There would be incentives for the asset value to lie between the moving average and BTC value at all times, therefore leading to less volatility. During a bull market, the investor will not realize the gains as investing in the asset. However, if the moving average ultimately tracks the long term value the asset, then this not an issue for the long term investor. Additionally, during a bear market, the investor is protected from downside assuming the value of the asset will recover.  The benefits for a short in the Bitshares system is less clear as there is the 30 day trade limit, so the trade is short-term, but there should be room to exploit overvaluation and also limited protection from surges.  The directionality of the MA could be guessed at as it would depend on the known leading edge and random trailing edge of the average; however, the market would adjust itself to account for this directionality.   This idea would also add to the marketing and demand of Bitshares - "$$$Invest in BTC but without the volatility!!$$$". Is there any catch to this I am missing or reason why it could not work or not recommended?