Lets say when the futures expire today on settlement date, does the seller of the future actually literally sell BTC on the open market so he can pay the cash to the Future buyer/holder? I was told the BTC futures market is cash settled.
Although trading Bitcoin futures doesn't require at any point trading actual Bitcoin, the futures market affects the cash market (and vice versa) through arbitrage. Some traders watch for discrepancies between futures and cash -- e.g., if the cash is lower, then sell futures and buy Bitcoin for a small but nearly risk-free profit by expiration (the futures settlement offsets the gain or loss on the Bitcoin). This trade, in turn, brings the markets closer together. The existence of these arbitrage traders means that futures and cash prices move together and the demand and supply of one is communicated to the other.
Taking for example CME's bitcoin futures, those are futures financially (i.e. cash) settled. This means that on settlement date the losing party is going to pay the winning party the difference between the contract price and that spot price at the settlement date. This difference is calculated on the underlying -- in this case Bitcoin -- and is paid in the settlement currency (here USD). There is no need to buy or sell Bitcoin to settle this contract.
Do note that as the market evolves, it's possible that contracts with different terms like physical settlement (could happen) or settlement in a cryptocurrency (unlikely to happen soon on a regulated exchange) will pop up and make this a possibility.