Would there be a use case for this derivative?
It's probably a good idea for reducing the volatility got those wanting to invest as the most it could drop in a day with the 50ema is 2%.
I don't think this sort of asset could be physically represented by something relevant so there probably isn't a use case as there is in goods extraction/production scenario.
I think you spotted the main problem of such an hypothetic contract: that in phases where the moving average is higher than the spot price you will probably not find a buyer for the moving average price, so you will make an additional loss. It hasn't to go to zero, only significantly lower. So the "naive" version of it would probably not work.
It would however be interesting, if the price of these contracts would follow exactly the spot price (then they of course wouldn't make any sense) or if there could be any advantage on buying the moving average if it's higher than the spot price which could result in a premium, making it less volatile. For example there could be people valuing inertia, and if there are enough of them, they could move the price in the direction of the moving average.
Yeah it can't go to zero but yeah you can't get people to buy it if btc is lower either as it won't recover as well as bitcoin - but it might act as a hedge in some cases (especially against volatility)?
One idea could be to try to replicate an asset which works a bit similar with options. A trader could sell the right to sell Bitcoin for the price of a moving average, which would be similar to a put option, only with a changing price. Maybe this could even work with call options, have to think about that a bit if it can behave different enough than normal, static put/call options.
I think this may work but it'd need something tight to control what the ema and price are being sold to the user as in the contract.
PS: I thought again a bit about this post and I think now I made a wrong assumption, so I'm more optimistic again about this kind of contract. Instead, if the settlement process is done right (i.e. the trading platform guarantees that the contract is settled at the EMA/SMA price point) then these contracts should work without problems. After all, you trade the EMA/SMA and not a "physical" Bitcoin, so even if Bitcoin goes to zero, the EMA/SMA value can still be worth something and the trading platform can enforce it if the collateral is enough. It would be a simple bet like on football games.
Yeah it is good for lower volatility and if its enforceable by the exchange then I see no reason there'd be a problem/breakdown (unless the pair was traded more on the exchange than bitcoin because of its lower volatility - idk if that'd happen or not.