Consider a box floating on water having a coin on top, now suppose after some time by some external influence, the coin is dropped into water. After doing the calculations, to my surprise, I found that the water level actually drops...I just can't understand this phenomena. For what reason does this happen? I think that my whole conception of buoyancy is wrong after this because intuitively I think water level rises because the coin would apply both it's weight and take up some volume while in the water.

[![enter image description here](https://i.stack.imgur.com/9yEPL.jpg)](https://i.stack.imgur.com/9yEPL.jpg)

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**Notes for future answers/ existing answers:**

* After some deep thinking, I started to realize the problem was that I had this intuition that water would have been compressed by the weight somehow. How exactly does that effect vary in the scenario displayed above?
* After even more deep thinking, how does the behaviour of fluid change as we relax/ impose the condition of compressibility ? specifically how would results in this case differ? ( A diagram would be nice)
* Suppose we constantly applied a force onto the surface of a water, like a pressure, by the logic given in most answers, the water level should rise! but, intuitively it is often said that water level drops as we apply more pressure on the face open to atmosphere

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My question is different [from this stack](https://physics.stackexchange.com/questions/30268/basic-buoyancy-question-man-in-a-boat-with-a-stone?rq=1) because my confusion is mostly about the actual structure of the fluid and response of fluids to load rather than the directly calculated volume changes.