The balloon rises beause of buoyant force being greater than its weight, I'm interested in the change in scale reading while the balloon is still completely underwater. And let's ignore any viscous forces.
Here is the way I think.
While the balloon goes up, it starts to expand because of weaker pressure on it. Because it is going up, water takes its place and the center of mass of the water-balloon-container system accelerates downward. That means that the net force on the system must point downward. So the weight of the system gets more than the reaction force exerted by the scale and the scale reading gets smaller.
I'm not sure about the center of mass of the system accelerating downward though. When I think of this problem in terms of energy conservation; balloon gets potential and kinetic energy, so water has to lose potential energy due to the conservation law. That means the center of mass should be moving downward.
First of all this is not a homework question. I'm just curious about it. I'm looking forward to seeing your comments..