Not a medico so I can't help to explain potential causes for the blood traces but I gather whilst a significant number of cases can be put down to quite benign causes, some are more worrisome and the earlier caught, the easier treated.
For myself, many years ago I had visible traces of blood in my urine and went through a similar process (although cystoscopes were not flexible in those days). Without going into medical details, I've had many cystoscopies since so I hope the following words - based on my experience - might help.
A cystoscopy these days is uncomfortable but nothing worse. You'll probably have a local/surface anaesthetic applied - this is a gel squirted into the urethra. It's an odd sensation, akin to having a cold pee backwards (I really can't think of any other way to describe it). Sometimes you'll get a second dose 10 minutes later. Then they'll leave you alone for another 10 or 20 minutes during which things go numb. The examination takes just a few minutes. Slipping the cystoscope in is, again, an odd sensation but only because you're not used to it rather than anything else. The doctor can fill your bladder with water or whatever during the examination and then you'll want a pee when it's over - in my experience they always do this so I guess it helps with the examination.
It's all done in a reclining chair with your legs up in stirrups - GF now thinks I should be more sympathetic for some of her visits to the doc. It stings a bit when you have a pee for a few hours - maybe up to a couple of days depending how ham-fisted the doc was - afterwards. But after a couple of days everything is back to normal.
Maybe the doc can give you something to ease your nerves - most seem happy to do this if asked (cystoscopy doesn't bother me but there's something else they do to me sometimes and I really want to not care!).
Hope this puts your mind at rest to an extent - feel free to PM me if you have any questions that I might be able to answer.