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

Written by: Evanss6

Compiled by: AididiaoJP, Foresight News

At any point in the past, this might have been good advice when talking about cryptocurrency: hoard Bitcoin, or at least mainstream coins, do some staking, try new products with rewards, trade contracts without getting liquidated—chances are you would have made money. Behind this are two core beliefs: Bitcoin will become a more mainstream non-sovereign store of value, and smart contracts will become the infrastructure of finance.

I won’t go into detail about how these judgments have been validated, because we need to talk about this "cage." Just two facts:

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

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

Cryptocurrency is increasingly resembling traditional finance. It’s being bought by the previous generation in brokerage accounts, promoted by Larry Fink, and used by companies like Robinhood. What many of us imagined a decade ago is coming true.

So what exactly is the "sunk cost cage"?

Simply put, it’s sticking with something because of past investments. This can appear in many places: your skills, investments you still hold, your relationships, a job you’re afraid to quit, or spending all your time on cryptocurrency.

• "I don’t want to leave her because our past is too deep."

• "I don’t want to change careers because I’ve spent too much time on this."

• "I don’t want to sell Ethereum because I bought it early, and it’s been good to me."

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 know the shadows on the wall, unaware of where the shadows come from or that there’s a larger world outside.

In Plato’s allegory, the prisoners stay in the cave because they mistake the shadows for reality, unaware that there is a "more real" 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 fits, the career you no longer believe in, the identity built on long hours and silent endurance—these are the 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 "the reasonable thing to do."

But freedom isn’t cheap. Escaping the sunk cost cage means admitting that what you’ve built may no longer serve you. Past efforts cannot justify staying. Like the prisoner turning toward the light, this requires not only courage but also betraying the part of yourself that is overly loyal to your self-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 stayed in the cage for a long time myself.

As a teenager, I fell in love with poker. In the back row of high school classes, I was always calculating bankroll expectations in my notebook, not listening to lectures or taking notes. Within two years, I went from micro-stakes ($0.01/$0.02) to high-stakes tables. Over time, I enjoyed playing less and less, seeing it only as a way to make money, always thinking, "I’ll quit in a couple of years."

But a decade passed, and nothing changed. I was still playing, still winning, but always felt the money wasn’t enough to "do something else." Worse, I didn’t even know what else I could do, and I saw clearly: poker is a declining game, and I had to work harder and harder to keep up. But I told myself I should continue because I’d spent so much time getting good, it paid better than other options, I had no other viable path, and no time to think—staying a consistent winner in high-stakes online games was exhausting enough: studying strategy, finding good games, avoiding cheaters and shady platforms...

Honestly, this "can’t easily switch careers because it makes money" is a luxurious problem. But as it became harder to find better games, I knew the days were numbered.

First Encounter with Cryptocurrency

I encountered cryptocurrency early through my previous career. In 2012, I first read about Bitcoin on a poker forum called TwoPlusTwo. Back then, the Bitcoin sub-section had been open for over a year.

The first reply was hilarious: "This thing is worth 70 cents now? A currency no one uses can reach this price, lol." The second reply said you could actually exchange it for dollars or buy pizza—this was the early use case of what later became a $2 trillion asset. Scrolling down a few more replies:

"Really missed an era." Anyway, I noticed it because some poker sites started using it. At the time, I thought its $2 billion market cap was outrageous. If it was for black/gray markets, maybe it was worth that; if it could go mainstream, its value would multiply endlessly.

By 2016-17, as my investments became substantial, I spent more and more time on cryptocurrency (especially ICOs). This diversion of time was my first step out of the cage. But it wasn’t until the rise of DeFi in 2020, when it actually became profitable, that I fully jumped in.

Back then, I knew nothing about trading and had to learn on the go. I studied economics and math in college, but my only real skill was poker. Fortunately, poker is excellent training 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 endure bad runs—all essential for independent trading.

In the end, I’m grateful and lucky that I spent a lot of time from 2013-2019 exploring these curiosities, which put me in the best position when opportunity arose. If I’d focused more on poker those years, I might have played better, but following my intuition to create a transition/exit plan was truly fortunate.

How does this "cage" apply today?

In recent years, financial nihilism has become increasingly evident in the crypto space. More and more people no longer believe in the ideals that drew them in initially. The goal has become "making money," going all-in, grinding hard, and "exiting" once you’ve made enough.

Roughly, there are four camps:

• Green Camp (believe in Bitcoin, not other cryptocurrencies)

• Red Camp (believe in cryptocurrency, not Bitcoin)

• Brown Camp (believe in both)

• White Camp (believe in neither)

Add two scenarios to each camp, and it becomes eight types:

• (a) Believe there is still upside, worth the risk

• (b) Believe the upside has 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’re better off starting to diversify your time and make an exit plan. If you’re in 1(a) or 4(a), just hold Bitcoin and don’t 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 I, who was mostly in 2(a) from 2015-2023, am now somewhat oscillating between 1(a), 3(a), and 3(b).

Let’s talk about the Red Camp. It’s been painful here the past few years.

We’ve basically been in a situation where Bitcoin dominance keeps rising, even as the crypto system overall becomes more adopted. Even if you accurately predicted that Ethereum ETFs would see over $4 billion in net inflows, predicted that giants like Robinhood would use its technology, predicted that Trump would win, reform the SEC, end OCP2.0, and create a pro-crypto environment. From the day the ETFs launched, your Ethereum investment is still down. And today, Ethereum is around $2,600—2015 investors are up 2,000 to 8,600 times.

So the Answer

I doubt whether "enduring," as Mippo said in the tweet at the beginning of this article, is really the right path or the biggest opportunity. Everything you dreamed of has either already happened or is on its way. In 2017, if Robinhood announced building on Ethereum, the price would have jumped 10% immediately, but now it’s different. The move now is to buy HOOD stock. I believe there are still opportunities in crypto, but the trend of opportunities being captured 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 need to invest early in these projects or build them yourself. So Mippo isn’t wrong; solving real problems in crypto is still an opportunity. But don’t assume that just because crypto technology is being adopted, current coin prices will necessarily rise (especially compared to other assets you could invest in).

Unless you’re a true Red Camp diehard 2(a), "enduring" is choosing to stay in the cave watching shadows on the wall while people outside are working on AI and robots.

You’d better ask yourself honestly: Which camp are you in? Do you even like cryptocurrency? Regardless, try to develop some skills that are useful elsewhere, so if it doesn’t work out, you have a fallback. At the very least, you won’t be unhappy spending all your time on something you’re already tired of. And if you’re wrong, you have a soft landing place.

The door of the sunk cost cage isn’t locked; what traps you is 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.