Congratulations! Yes, you are probably losing water, but that doesn't matter because it is still excess weight which makes you feel bloated and bad. Water or not, it is still weight, mostly around your stomach. By the end of the week your pants are going to feel a bit better!
The reason for the water loss is the lack of carbs lets our body burn stored glycogen, which is most popularly stored in water in the stomach area. When you burn off the glycogen from the lack of carbs, your unneeded water flushes out, and you feel a ton better.
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