Just so that I understand your business proposal, I would go over your example here.

I bought $1000.00 worth of bitcoin.  Say it is 0.1 BTC.
I buy a policy with you for $2.00 for 12 months of protection.

I hold on to that and one day, it dips to $500.00.

Now I could claim a loss against my policy and you validate that I had 0.1 BTC and the current BTC price is 50% of my purchase price.

I lost only $2.00 policy premium.

Now a set of questions for you.
Whether there are many customers or just one, the math has to make sense.

How will you cover that $498.00 difference?

How will you determine that a claim is valid?  E.g. with the BTC price being so volatile, the price could touch $500.00 and then rise back up.  How will be consider this?
What if BTC price drops below $500.00?  I'm assuming that your coverage is limited to $500.00.

If you can answer how you could cover the $498.00 loss, I for one would be interested it digging further.