HODL Waves represents a macro view of how long a given coin is held before it is moved. Each coloured band represents the relative fraction of a given cryptocurrency in existence that was last transacted within that time window.
The warmer colours at the bottom represent coins that have been moved recently, while the cooler colours at the top represent coins that haven't been moved in a long time.
Active supply bands are measured by calculating the number of coins that have been transacted within the specified time window.
HODL Waves aggregates and stacks the following active supply bands:
Dhruv Bansal - Bitcoin Data Science (Pt. 1): HODL Waves