Estrogen and hormones may reduce their muscle mass, but not really enough, especially not in an athletic individual, one who has been training those muscles under "male circumstances". Also, skeletal structure is different, as is bone mass and density, muscle placement, etc.
Really, any transwoman who can actually take pride in such a victory against bio-females already has highly questionable ethics as it is.
Transmen are a different matter, a different set of similar issues. They're not going into male sports with an unfair advantage, so if they want to compete even with the deck stacked against them, that's more acceptable, at least in "individual", non-contact competitions like weightlifting, or foot-racing.
A problem still lies in gender differences when it comes to contact sports, however, like wrestling. They face an unfair handicap (the sporting term, not the disability term) and are in more risk of real harm. Not to mention socially reinforced constraints in their opponents about not hitting women, if it should be publicly known that the competitor is a transman.
If a biological man should win in a physical competition against a transman, who is still a biological woman, (far more likely than not, though there will be outlier cases), there's a chance that he won't be able to feel like he accomplished any real victory, for good reason. There's also a chance that the public would turn against him, humiliate him and mock him. "Ohhh, big strong man can beat up a biological girl!"
Even if the transman wins, there's a very good chance the bio-male competitor will face mockery because he "let a girl beat him up".
These things may mean the transman will find it hard to find an opponent who will accept the match-up, or they may get opponents who default on the match at the last minute. (And if the transman takes pride in winning by default, their ethics are just as questionable as the transwoman's.)
In any case, if the problem with trans in sports is as huge and widespread as they make it out to be, that surely must mean they have enough trans competitors to form and fill their own league, no?