Difficulty Level
Difficulty level refers to how challenging it is to solve the puzzle needed to add the next block to a blockchain. The difficulty level adjusts based on the total hash power devoted by miners to solving these puzzles to try and keep the average time between block’s being added steady.
Hash power goes up difficulty level goes up. Hash power goes down difficulty level goes down. While not a 1 to 1 relationship. Difficulty level and price tend to be correlated.
As the price of a cryptoasset goes up it becomes more worthwhile to try and solve the puzzles and obtain the block reward. The higher potential reward incentivizes more resources to pursue it increasing the hash power of the network.
The Bitcoin difficulty level adjusts every 2,016 blocks based on the time it took to add the latest 2,016 blocks to the blockchain. The goal is for it to take two weeks to add 2,016 blocks every ten minutes.
If its been less than two weeks for the 2,016 blocks to be solved the difficulty level increases. If its been more than two weeks the difficulty level decreases.
Historically Bitcoin’s block times have averaged less than 10 minutes. Because the difficulty level adjusts based on past hash power.
While the overall hash power devoted to the network tends to increase in real time as the price rises. Causing the difficulty level to try and catch up to reflect the hash power added in pursuit of the higher value block rewards resulting from rising prices.