People can be mistaken about experiences
People can, and often do, form radically mistaken beliefs about their conscious experiences—eg victims of blindness denial claim they can see although they are blind. So the possibility of fading qualia (option 2) shouldn't be rejected.
Argument anticipated by David Chalmers (1996).
References
Chalmers, David. 1996. The Conscious Mind. New York: Oxford University Press.