In this famous poem, titled "The Second Coming", Yeats criticizes religious passion, in the last verse he declares to now know "That twenty centuries of stony sleep/Were vexed to nightmare by a rocking cradle", in this passage he makes the same argument as in the question's passage, he criticizes the sleep of ignorance and how it became a nightmare due to passion. Therefore the first option is the right one.
Yeats classifies “passionate intensity” as worse than a “lack of conviction” because A “passionate intensity” for certain ideals can be destructive.
Yeats refers in this poem ,"The Second Coming" , to the consequences of WWI. Therefore, the ideals leading the war are destructive and do a lot of harm with passion. He says that good people - The best - are the ones who do not have any conviction. They are at a loss. They suffer the consequences of the " passionate" war ideals.
