Unfortunately, if all your contributions to your 401k before the balance was transferred to an IRA, then you have no "tax basis" in the 401k and therefore in the rollover IRA.
The only way the you would have a deductible tax loss on the loss that you did realize if if you had made non-deductible contributions to your 401k. Had that been the case, then if you close out your IRA and were to receive less than your non-deductible contributions (your tax basis in the IRA), then you would have a tax loss that could be taken as a miscellaneous itemized deduction subject to the 2% floor.
So, in the situation you describe, presuming you have not made any non-deductible contributions to the 401k (or the IRA), the loss that you are experiencing on your IRA is not deductible for tax purposes as you have no tax basis in the IRA.
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I wish I had a more favorable answer for you, but the rules are very specific in this area.
Please don't shoot the messenger.
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