My interpretation I am sure is influenced by the facts that I too have lower self-esteem and yet am in a challenging position.
I think the knife may represent self-esteem.
It is a potentially great tool for self-defense. We are a bit weary of it, knowing it could be dangerous. At times what is available to us is inadequate to the task at hand. Sometimes though we are self-confident, and it is amazing how well we can handle those challenges.
With all the challenges going on, at times it feels like one is under attack, and sometimes due to low self esteem we may perceive being under attack even when we are not, and expect an attack to come. In dreams even more than in waking life, expectations are self-fulfilling prophesies, so if you expect an attack, it will come.
The thing with self-esteem is that even if we find the dull knives only, with determination we can sharpen them and can fight a good fight if we just change our self perception and believe in ourselves. At times it is hard to do. But it is necessary.
The satisfaction when we feel empowered, when the knife is sharp, and we can successfully defend ourselves against all that life throws our ways, that feeling is amazing. And the goal is to hold on to that feeling, aim for it, and expect it to happen more often. We can do it!