The Lions held Hawthorn to just three goals in the first half while managing just one of their own, before falling to their fifth loss in the past six outings. Crucially, three of those losses have seen margins of eight points or less.
"Our destiny is still in our own hands but we've got to win the [three remaining] games," Matthews said.
"We've got to do everything right, but it becomes a confidence issue. The difference between winning a game by a point and losing a game by a point is virtually nothing within the game, but it's gigantic in the aftermath with confidence and perception.
"All of a sudden instead of everyone saying you're playing well, everyone says you're playing bad and it's easy for players to believe that so you gradually lose confidence.
"It's going to take all our resilience and our determination to make sure that we come up again next week, but that indefinable confidence would have to be a bit shaky at the moment with a lot of the guys."
The match was a dour affair until deep into the third term and Matthews admitted it had been a deliberate ploy on his behalf to try and restrict the supply to Lance Franklin and Jarryd Roughead.
"We took the attitude that we would try to make it a low-scoring game … but once you get behind you've got to try and make up the margin and their scoring power is a lot better than ours," he said.
"It was a frustrating second half, but in the first half at least we played the game on our terms a bit and kept the margin tight.
"Once they got a few goals up we had to try and see if we could pick up a few goals and that probably contributed to opening the game up and once the game opened up they were a bit too good."
Playing as a loose man in defence, Luke Hodge hurt the Lions with 31 possessions and Matthews said he had rolled the dice in that aspect of his game plan.
"We kind of knew what we were going to do, but the fact was Hodge was going to be able to float in that back 50 and he does it extremely well," he said.
"Going in I must admit if you were allowed to bet and their were odds on best player on the ground I would have backed Luke Hodge because the way we set the game up. Luke Hodge was always going to be a pretty good player."
Important backman Josh Drummond didn't take any further part after three-quarter time and Matthews revealed a torn quadriceps muscle had likely ended his season even if the Lions make the finals.
