I've been confused for a while on what happens to a particular cryptocurrency when swapped to another. I mean when a swap may be BNB to get usdt, what happens to the BNB?
When you swap/convert from one coin to another in an exchange, the exchange basically takes your coin and adds it to their reserve or pool and they also send you the coin you've swapped to from their reserves as well.
But another user can always swap another coin to BTC at anytime and receive the BTC, so where is the BTC coming from since it already in circulation (held by other holders)?
It is simply supply and demand. Exchanges for example hodl quite a lot of Bitcoins that are in circulation, so you can always buy Bitcoins from them, or convert from BTC to other coins. There's also p2p trading, were individuals are ready to sell their Bitcoins to you for fiat, or they could as well want to swap their Bitcoins for the coins that you are offering.