I went reading the BASIC source and either I'm overlooking something (likely) or the code to actually increase difficulty on level up is .. not there. The main level cycling code is at line 175:
175 poke f,32:poke k,32:poke q,32
180 f=1944:k=f:g=1:l=g:for x=1084 to 2004 step 40:poke x,32
185 next:gosub 950:yy=yy+1:if yy=10 then yy=1:e=e-(e*.5):j=j-(j*.5)
Related variables:
- w: printed as the LEVEL. Not otherwise used
- yy: number of nevets per level, cycles from 1 to 9
- e, j: numbers (initially 8 and 16) that are HALVED every time yy cycles back to 1. Not otherwise used.
There are also 2 copies of the joystick reading code (line 100 and line 1000), both used. one handles diagonals and the fire button, the other does not. huh.
If that's right, then arguably the "game loop" ends when the number of nevets resets back to 1. The exact pattern won't repeat because RNG, but there's no increase in difficulty.