Isn't it just looking at how long since each UTXO has moved and then categorizing them by time periods?

Yeah but it's still the best estimation. There's signal despite the noise.

But it's not the easiest chart to understand. Hard to see how one of the group evolves because you have to visually subtract the bottom to the top.

m0wer

I wonder how much of this metric is real. People upgrade their cold storage all the time. That would show coins moving, and would reset their hodl wave.