I decided to write an article about this topic, including solutions to make sure your trading becomes more rational: https://steemit.com/cryptocurrency/@wickcrypto/an-emotional-guide-to-crypto-trading-why-paper-trading-is-useless
I would personally say Paper trading is somewhat useful
I understand those emotions compared to actual trading involving large amount of money
but what makes it useful to me is that, you could actually do simulations on your plan/new trading techniques without sacrificing/compromising your funds and doing it in an actual trading platform compared to testnets.
Building confidence is much more viable paper trading is your friend