Borrowing from my good friend Valorum's answer on SFF: it had hit the coral reef.
According to the film's official novelisation, as it passed through the barrier, the battle cruiser hit a hidden reef and was holed below the waterline.
Beyond, the enormous ship that had brought the Germans had hit the
coral reefs. Black, gritty smoke from the sinking battleship swept
across the reef and over the beach. It smelled like it had come from
the burning pits of hell.
Wonder Woman: Official Movie Novelisation
It then sank.
The battleship couldn't see that there was an island approaching, as the island was sneakily covered by a sneaky fog.
As such it ventured too close and probably at too high a speed to stop in time. And what happens when a large vessel comes too close to an island?