This phenomenon occurs due to the refraction of light. Refraction is the bending of light when it passes from one medium to another of different optical density. The light rays from the coin at the bottom travel from water (denser medium) to air (rarer medium). As they cross the boundary, they bend away from the normal. To an observer, these rays appear to be coming from a point higher than the coin's actual position, making the coin seem raised.

This apparent shift in position is governed by the laws of refraction. The refractive index $n$ of water, given by $n=\frac{c_{\text{air}}}{c_{\text{water}}}$, is greater than 1, causing this bending effect.

Final Answer: refraction of light.