Bitcoin could get a boost if one key level holds, according to trader Jim Iuorio.

The digital currency, which is up nearly 200% this year, has seen massive price swings this week, hitting a 17-month high Wednesday before crashing on Thursday afternoon. The $3,000 drop occurred around the time that Coinbase, a trading platform for cryptocurrencies including bitcoin, saw a brief outage.

But Iuorio, managing director of TJM Institutional Services and a longtime futures and options trader, says there's still hope for bitcoin despite its volatile tendencies.

"I said yesterday that as long as it stayed above $10,000, I still think it has some decent upside," Iuorio said Thursday on CNBC's "Futures Now." "Granted, I didn't know it was going to go back and test that $10,000 [level] so quickly, but I still think I'm looking now for some sort of constructive pattern for it to go higher."

Still, Iuorio acknowledged that some investors may indeed be deterred by the chaotic action in bitcoin.

"The size and the speed of the rally was unsustainable, and the size and the speed of the correction was even worse," he said. "But what something like that just does is it shakes out the weak hands and reminds people that there's risk. This is, I hate to say, a healthy movement in something that's gone as far as it is. ... This is what has to happen. I think it could easily gather itself above the $10,000 level and resume what it was doing before."