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?
Your swap is only filling open orders in exchanges.
Someone has a buying usdt order and you fill it with bnb when you swap it.
Another confusion I have is about BTC.
BTC has a total supply of 19,495,156 million. Now the entire 19,495,156 are in circulation which means they are being held by holders/users. 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 comes from another open order.
Someone put a price to sell btc for some coin, and when someone wants to swap another coin for it , that order gets filled.
Most orders and bot generated AFAIK, to try to get profit out of small spreads between exchanges/coins pairs.