The algorithm is published (see my feed). It looks at the average HIVE price from top exchanges (because that is more liquid and the price quotes more stable compared to HBD prices) and then compares that with the internal market price in HBD.

If it is returning the HBD, that means it wasn't able to immediately buy more than $1 worth of HIVE for 1 HBD.

Another strategy would be to hold on the HDB for a while to try to get a better price, but that isn't being done. I wanted to minimize the trust factor of holding funds.

The mismatch may be a result of how coinmarketcap (which I think is where you got that chart) calculates prices and/or there may still be an opportunity to arbitrage between internal and external markets. I know there are several bots doing so already, but perhaps there could be more. If so, then I would encourage people to take advantage of the opportunity.