When you lose weight, fat cells shrink. In a fat cell, there are triglycerides and cholesterol. Now, as that fat cell shrinks, you can burn triglycerides, but you cannot burn cholesterol. So it will go into the blood, go to the liver, and come out through the bile. But you’ll be totally fine as long as your triglycerides are low. (If you’re not using those as fuel, then you’re eating too much sugar.)
A keto diet has shown to improve triglyceride levels and cholesterol levels most associated with arterial buildup. More specifically low-carb, high-fat diets show a dramatic increase in HDL and decrease in LDL particle concentration compared to low-fat diets.3A study in the long-term effects of a ketogenic diet shows a significant reduction in cholesterol levels, body weight, and blood glucose. Read more on keto and cholesterol >