Body battery discharges during charging??

Is your body on pause mode while the watch charges? Heartbeat halted, no pulse, no energy comsumption? Like a cold-blooded animal during hibernation? Obviously not. That's why it drops. It's an estimate value.

Like it was mentioned above, your body battery depletes, with or without the watch. At the bottom of the graph it should show that a solid line represents body battery changes, and a dotted line is Estimated. 

This happens when I charge phone and put watch back on. This ain't right