That's what I don't understand as well. If you buy $50 on Coinbase, I highly, highly doubt that Coinbase is doing an on-chain transaction for that amount to move it into your "own" wallet on Coinbase. Rather they are using their centralized ledger to keep track of who has what and then settling accordingly when you choose to withdraw.

I wonder where the data for the UTXO sets is coming from. Batched withdraws from exchanges? As more and more btc comes off exchanges, I wonder how this price estimation model will continue to function.