Can You Solve this Ice Diamond Riddle? ft. Vsauce’s Michael Stevens

Hm...
A tricky one.
The diamond is (as mentioned) more dense than water.
But the ice is actually less dense.
So if the diamond is small enough to allow the whole cube float we are in a situation when some of the water in the cube is above the water level. And when the cube thaws it will merge with the rest of the water, meaning the level will rise.
On the other hand if the diamond is big enough to sink the cube, the "initial" water level will rise before the ice is thawing so the thawing will only mean that less dense water is becoming regular density, meaning the water livel will drop. By a miniscule amount.

PS: oh. And just for the sake of completion - there is actually a sweet spot when those two effects are exactly bsllanced and water level will stay the same.