When Belief Becomes a Cage: The Sunk Cost Trap in the Crypto Era

As cryptocurrency transitions from idealism to mainstream finance, participants need to be wary of the sunk cost effect and soberly assess whether they are still striving for a worthwhile future.

Written by: Evanss6

Translated by: AididiaoJP, Foresight News

At any point in the past, when talking about cryptocurrency, this was probably good advice: stack up on bitcoin, or mainstream coins as well, do some staking, try out new products with rewards, and don’t get liquidated on contracts—if you did this, you probably already made money. Behind this are two core beliefs: bitcoin will become a more mainstream non-sovereign store of value; smart contracts will become the infrastructure of finance.

I won’t elaborate on how these judgments have been validated, because we need to talk about this “cage.” Just two facts:

Bitcoin ETFs have seen inflows of $49 billions, Ethereum ETFs have seen $4.3 billions, and more altcoin ETFs are just getting started. Michael Saylor himself bought over $40 billions, and many companies are gradually buying in as well.

Robinhood just announced it will use Arbitrum’s tech stack to build an EVM chain as the backend financial infrastructure for its platform, and will also launch the most popular crypto product: perpetual contracts.

Cryptocurrency is looking more and more like traditional finance. It’s being bought by the older generation in brokerage accounts, promoted by Larry Fink, and used by companies like Robinhood for their technology. The things many of us imagined ten years ago are coming true.

So what exactly is the “sunk cost cage”?

Simply put, it’s persisting in something because of past investment. This can appear in many places: your skills, investments you still hold, your relationships, the job you don’t dare quit, or spending all your time on cryptocurrency.

• “I don’t want to leave her because our past runs too deep.”
• “I don’t want to change careers because I’ve already spent too much time on this.”
• “I don’t want to sell Ethereum because I bought early and it’s treated me well.”

These are all sunk cost fallacies. Not realizing you’re thinking this way is a form of self-sabotage, making you continue doing things you know deep down are no longer beneficial.

The sunk cost cage is the modern version of Plato’s Allegory of the Cave.

The prisoners only recognize the shadows on the wall, not knowing where the shadows come from or that there’s a bigger world outside.

In Plato’s allegory, the prisoners stay in the cave because they mistake the shadows for reality, unaware that there’s a “truer” world outside. In the modern version, we stay not out of ignorance, but because we’ve invested too much in the shadows. That job that no longer suits you, the profession you no longer believe in, the identity built through long hours and silent endurance—these are all costs paid. The more time, education, and reputation you’ve invested, the harder it is to leave. The illusion is no longer just external; it’s internalized as responsibility, logic, and “reasonable things.”

But freedom isn’t cheap. Escaping the sunk cost cage means admitting that what you’ve built may no longer benefit you. Past efforts cannot be the reason to stay. Just like the prisoner turning to face the light, this requires not only courage but also betraying the self that was overly loyal to its own investment. The hardest part isn’t seeing the truth, but saying goodbye to the self that stayed too long, believed too deeply, and paid the price for the cage.

My Experience

I myself stayed in the cage for a long time.

I fell in love with poker as a teenager. In the back row of my high school classroom, I was always calculating bankroll expectations in my notebook, not listening to class or taking notes. Within two years, I went from playing $0.01/$0.02 micro-stakes to high-stakes tables. Over time, I liked playing less and less, treating it only as a way to make money. Back then, I always thought, “I’ll quit in two or three years.”

But ten years passed, and nothing changed. I was still playing, still winning, but always felt I didn’t have enough money to “do something else.” Worse, I didn’t even know what else I could do, and I saw it clearly: poker was a declining game, and I had to work harder and harder to keep up. But I told myself I should continue, because it took so much time to get strong, the returns were better than other options, I had no other viable path, and no time to think—just staying a consistent winner in high-stakes online games was exhausting: studying strategy, finding good games, avoiding cheats and shady sites…

Honestly, this kind of “can’t easily change careers because you can make money” is a privileged worry. But as it became harder and harder to find a better industry, I knew my days were numbered.

First Encounter with Cryptocurrency

I came into contact with cryptocurrency early on because of my previous profession. In 2012, I first read about bitcoin on a poker forum called TwoPlusTwo. At that time, the bitcoin subforum had already been open for over a year.

The first reply was funny: “This thing is worth 70 cents now, a currency no one uses can actually reach this price, hilarious.” The second reply said it could actually be exchanged for dollars or used to buy pizza, which was the early use case for what would become a $2 trillions asset. Scrolling down a few more replies:

“Truly missed an era.” In short, I noticed it because some poker sites started using it. At the time, I thought its $2 billions market cap was ridiculous. If it was only for black or gray markets, maybe it was worth that; if it could go mainstream, its value would multiply countless times.

By 2016-17, as my investments became substantial, I was spending more and more time on cryptocurrency (especially ICOs). This shift in time allocation was my first step in escaping the cage. But it wasn’t until DeFi took off in 2020 and I could actually make money that I truly jumped in.

At that time, I didn’t understand trading at all and could only learn by doing. I studied mathematical economics in college, but the only thing I was really good at was poker. Fortunately, poker is an excellent training ground for trading: it gives you ruthless real-time feedback on decisions, forces you to manage risk, price correctly, develop overall strategy, and builds emotional resilience and soft skills to survive tough times—all essential for independent trading.

In the end, I’m very grateful and lucky to have spent a lot of time exploring these curiosities from 2013-2019, which put me in the best position when opportunities came. If I had focused more on poker during those years, maybe I’d have played better, but following my intuition to make a transition/exit plan, I was really lucky.

How does this “cage” apply today?

In recent years, financial nihilism has become increasingly apparent in the crypto space. More and more people no longer believe in the beautiful ideals they had when they first entered. The goal has become “make money,” go all in, work hard, and “exit” once you’ve made enough.

There are roughly four camps:

• Green camp (believes in bitcoin, not other cryptocurrencies)
• Red camp (believes in cryptocurrencies, not bitcoin)
• Brown camp (believes in both)
• White camp (believes in neither)

Each camp, with two more scenarios, becomes eight:

• (a) Believes there’s still upside, worth the risk
• (b) Believes the upside has already been taken by early buyers

I think only those in 2(a) should devote all their time to cryptocurrency. If you’re in 1(b), 2(b), 3(b), or 4(b), you’d better start splitting your time and making an exit plan. If you’re in 1(a) or 4(a), just hold bitcoin, no need to pay much attention to anything else. 3(a) can hold some bitcoin and other assets, splitting time and energy between crypto and non-crypto. If you’ve seen my account and posts, you can probably tell that while I was mostly in 2(a) from 2015-2023, now I’m wavering between 1(a), 3(a), and 3(b).

Let’s talk about the red camp. It’s been pretty tough being here the past few years.

We’re basically in a situation where bitcoin dominance keeps rising, even though the overall crypto system is more widespread. Even if you accurately predicted that Ethereum ETFs would see over $4 billions in net inflows, that giants like Robinhood would use its technology, that Trump would win, reform the SEC, end OCP2.0, and create a crypto-friendly environment—since the day the ETF launched, your Ethereum investment has still dropped. And today, with Ethereum at about $2,600, investors from 2015 have seen gains of 2,000 to 8,600 times.

So the answer

I suspect, as Mippo said in that tweet at the beginning of this article, whether “endurance” is really the right path, or the biggest opportunity. Everything you dreamed of has either already happened or is on the way. In 2017, if Robinhood announced development on Ethereum, the price would have jumped 10% immediately, but now things are different. Now the move is to buy HOOD stock. I believe there are still opportunities in crypto, but the trend of those opportunities being taken by non-crypto assets (stocks) or insiders (teams/private investors—look at Celestia Finance) isn’t friendly to dreamers. If you really want to “endure,” you have to invest in these projects early, or do it yourself. So Mippo isn’t wrong—solving real problems in crypto is still an opportunity. But don’t think that just because crypto technology is widespread, coin prices will definitely rise (especially compared to other assets you could invest in).

Unless you’re a true red-camp diehard 2(a), “endurance” is just choosing to stay in the cave watching shadows on the wall, while people outside are already working on AI and robotics.

You’d better honestly ask yourself: which camp are you in? Do you like cryptocurrency? In any case, try to develop some skills that are useful elsewhere, so you have a backup plan if things don’t work out. At least you won’t be unhappy because you spent all your time on something you’re already tired of. And if you’re wrong, you’ll have a soft landing.

The door to the sunk cost cage isn’t locked; what traps you is only your own thoughts. All you need to do is open the door from time to time and walk out. Life is beautiful, and the world is full of possibilities.