how much have you lost?
You don't lose till you sell.
No, that's delusional. You have to value your assets at market.
Incorrect.
If you spend $1000 on 1 Bitcoin, you have 1 Bitcoin no matter what the market price is. That is what you bought, and you haven't lost it as long as you have that 1 Bitcoin.
If you sell that Bitcoin for $500, then you have 0 Bitcoin and $500 instead of $1000. Then you have $500 less than you started with, and nothing else.
But you already lost the $1000 as soon as you bought, and you gained 1 Bitcoin.