This forum can be so serendipidous sometimes; I was just thinking of stuff pertaining to the cultural myths surrounding Minoan-era Crete earlier today. Time to bust a few of them.
The first is that Minoan Crete was not a super advanced state; it was less advanced technologically than Mesopotamia, which had already had large cities and organised bureaucracies for about two millenia at this point. Arguably, the Anatolian cultures of this time were at least at the same level and probably more advanced as well. Cyprus was less advanced than many of its neighbour regions in this period but had started a palatial period as well, and strong civilizations also existed in Sardinia, Malta, the Balaerics, Sicily, Corsica, many of the Aegean Islands (in particular the Cyclades) and even Egypt of this period was probably on an equal footing with Crete.
The idea that Minoan Crete was advanced for its time partially comes from the fact that it was in Europe (even though that term is practically meaningless in the period) and more developed than most of its contemporaries in the rest of Europe, it was properly discovered before many of the other civilizations of the time were excavated, because of Arthur Evans portraying it as a peaceful matriarchal trading utopia and the reconstruction of Knossos giving it a visual image in people's heads, and because Greeks have claimed Minoan heritage for their own and make a big deal out of it.
Secondly, and related to the first point, the fall of Minoan Crete did not cause a regression in technology. Arguably, Mycanaean technology was more advanced than that of the Minoans, and elements of Minoan material culture were preserved after they had lost their independence long afterwards. The Minoans were not some strange super advanced civilization too good for this sinful earth(tm), the Mycanaeans took over their culture and vastly expanded its impact and reach. And the technologies that the Minoans developed were not lost; shipbuilding continued to be a major element of Mediterranean culture, international trade expanded, city planning and large palaces were abundant. And this attitude also talks like they somehow vanished without the rest of the world even noticing, when material evidence both in Crete and abroad demonstrates its incredibly strong trading links with the rest of the Mediterranean.
Thirdly, the Minoan civilization was not destroyed by Thera; there's a slight problem with that theory, which is the ash layer caused by the volcano is underneath the last strata showing complex palatial constructions. In other words, the last great Minoan palaces were built after the eruption and without too much trouble. The tsunami caused by the eruption caused coastal damage but barely penetrated the interior of the island. The destruction layer that seems to signal the end of Minoan independent culture on Crete is deliberate destruction, probably but not necessarily Mycanaeans are to blame for this. The chronology of Mediterranean cultures is a little confusing, as each identified culture tends to have its own period names, but there is a clear chronology for Minoan culture that exists and I advise you take a look at it; the end of Minoan culture is not at the hands of a volcano and its after effects.
Fourthly, the island of Crete doesn't have anywhere near enough resources for a country to develop industrial technologies; the island is capable of quite large agricultural production, and has good copper deposits, along with that most vital of ancient resources wood. With these things it was easy for it to produce ships, metal tools, buildings, material objects, and what it lacked it traded for. But it lacks iron, enough land to support industrial-sized populations, and most importantly it has absolutely no coal. You can make charcoal out of wood, but they needed the wood for shipbuilding; you can't sustain a developing industrial economy with the same resource required to give you enough foreign influence to allow you to attempt industrialising in the first place. Also, coal had almost no use in contemporary cultures, so they would have no way of acquiring it from foreign sources as no-one would even be aware of the existence of it.
Other things that make this idea completely impossible: the Bronze Age Collapse, the widespread breakdown of the Bronze Age political structures and trade links that is considered to be a result of economic collapse. This would have hit Minoan Crete incredibly hard: the fact that there are aggressive, far more powerful states in the region as Mycenae demonstrated fairly aptly: the fact that the island's own geography predisposes it to political division in a similar fashion to Greece: and last but not least, the fact that we know almost nothing about actual Minoan political structures and culture/s. This already makes reconstructing its OTL existence nigh impossible for people who have studied the island for years, let alone alternate history scenarios. I couldn't tell you if it was one state or several, one culture or several, how the Mycenaeans introduced themselves, whether they had a military of any kind, whether they were as powerful at sea as Thucydides thought a thousand years later.
To put it simply, this scenario isn't happening, though I hate to be the party pooper.
