It may be a stuffy academic tome and a whopping $277, but the book, Mystery of God: Early Jewish Mysticism in the New Testament has one major thing going for it. It’s the only source I’ve found in more than ten years of study which accurately interprets the water in 1 John 5:6 and by extension John 19:34. The water in both verses refers to Jesus’ divinity. 
Not By Water Only
This is the One who came by water and blood, Jesus Christ; not with the water only, but with the water and with the blood. (1 John 5:6)
At its most basic, 1 John 5:6 is a counter claim to a belief that Jesus Christ came in water but not in blood. John beleives Jesus came both in water and blood. Some opposing group appears to beleive that He came only in water.
Great.
So what does each element mean? Here are the authors of the Mystery of God, with only brief comment from me.
The Standard View: Water and Blood as Baptism and Death
It is tempting to suppose that the reference to water in this passage is a reference to Jesus’ baptism and the blood to his death on the cross. In that case, it would appear that we have a repudiation of a Christology which asserted that only the baptism, and not the suffering of the cross, was part of the coming of Christ.
This is how the New Living Translation “translates” it, “And Jesus Christ was revealed as God’s Son by his baptism in water and by shedding his blood on the cross – not by water only, but by water and blood.
Put like this, the similarities with Gnostic Cerinthus’ teaching seem very marked indeed (see Irenaeus, Haer. 1.26). After all, according to Irenaeus, Cerinthus believed that Christ descended in the form of a dove, but departed from him, so that only the human Jesus suffered and rose again, while the divine Christ remained impassable. 1 John 5:6 would seem to indicate that the false teachers accepted the presence of the heavenly Christ at baptism but not at the crucifixion.
John actively opposed Cerinthus and his teaching during his ministry in Ephesus. Thus Cerinthus becomes the key to unlocking the meaning of water and blood.
Problems with Water Refering to Baptism and the Cross
But there’s several problem’s with this interpretation.
First of all, it is by no means obvious that the coming of Christ spoken of in 1 John refers to the events which characterized his life as a whole but speak rather of the mode of his coming (i.e. his incarnation, the reality of his humanity). This seems to be the case in 1 John 4:2 and 2 John 7, where the coming on both occasions is linked explicitly with the humanity of Jesus.
1 John 4:2 states, “by this you know the Spirit of God: every spirit that confesses that Jesus Christ has come in the flesh is from God, and every spirit that does not confess Jesus is not from God.” 2 John 7 reads, “For many deceivers have gone out into the world, those who do not confess the coming of Jesus Christ in the flesh.“
A more natural explanation of 5:6, therefore, is to suppose that the water and the blood refer to the nature of the incarnate Christ rather than events in his life. This is a view which would seem to be confirmed by the passage in John 19:34, which seems to parallel 1 John 5:6.
John 19:34, the only mention of blood in the crucifixion is an element of Christ’s body and not simply the representation of an event. It says, “But one of the soldiers pierced his side with a spear, and at once there came out blood and water.”
The point is further supported by a study of blood in the writings John. Though the only reference to blood in John (1:7) may seem to point to the event of Jesus crucifixion its more likely that it refers to the physical nature of his sacrifice. In the gospel of John (specifically 1:13, 6:53) blood and flesh have a synonymous meaning.
Secondly, the other passage dealing with the false teaching in 4:2 is not so easy to interpret in the light of the teaching of Cerinthus as many have supposed. The issue here, and for that matter also in 2 John 7, is not the extent of the presence of the heavenly Christ throughout the life of Jesus of Nazareth, but the reality of the humanity of Jesus Christ. There seems to be no question here of the problem of a separation between the divine Christ and the humanity of Jesus. Rather, the author of 1 John repudiates the views of the those who reject the reality of the incarnation. This was not, as far as one can ascertain, part of Cerinthus’s Christology. Thus, if we start with 4:2 as a summary of the Christology of the false teachers, we are driven to conclude that the issue was the reality of the humanity of Jesus Christ.
Amen. So what then does the water mean?
Blood and Water as the Human and Devine Natures of Christ.
How then are we to understand 5:6 in this light? Is this a separate christological deviation, or can it be related to the other aspects of the false teachings? The reference in 1 John 5:6 is not to events in Jesus’ life but an affirmation of the reality of the incarnation by pointing out the character of Jesus’ nature, in much the same way as the parallel passage in John 19:34. This view has the advantage of being consistent with 1 John 4:2 and 2 John 7. There are two further factors to be borne in mind when interpreting the passage in the latter way, either the reference to water and blood could reflect ancient beliefs about human beings, or the water and the blood could represent the two aspects of Jesus’ nature, the water the divine, the blood the human. The second alternative fits better with the fact that the writer wants to deny a view that Jesus Christ came by water only, an idea which is not completely comprehensible if this passage is merely about the make-up of humans.
Emphasis on blood as a sign of the reality of the incarnation is found also in Ignatius, Smyrn. 6, and such an emphasis contrasts with those who deny the reality of his humanity by suggesting that the body of Jesus was made up of some other substance.
Ignatius in his letter says, “Let no man be deceived. Even the heavenly powers and the glory of the angels and the principalities both visible and invible, except they believe in the blood of Christ.” In speaking of those who deny this he goes on to state, “They have no thought for love, nor for widow, the orphan, the afflicted, the prisoner, the hungry nor the thirsty. They withhold themselves from Communion and prayer, because they confess not that communion is the flesh of our Savior Jesus Christ, which flesh suffered for our sins, and which in His loving-kindness the Father raised up.”
Wengst rightly points out the difficulty of finding examples of Gnostic teachers who considered that Jesus was made up of a watery substance, without any human blood. There is some evidence, however, to suggest that some later Gnostics did think of Christ as consisting of an ethereal substance (Tertullian, De carne Christi 6 and Adv. Marc. 3.11).
Tertullian states, “Thus the official record of both substances represents him as both man and God: on the one hand born, on the other not born: on the one hand fleshly, on the other spiritual: on the one hand weak, on the other exceeding strong: on the one hand dying, on the other living. That these two sets of attributes, the divine and the human, are each kept distinct from the other, is of course accounted for by the equal verity of each nature, both flesh and spirit being in full degree what they claim to be: the powers of the Spirit of God proved Him God, the sufferings proved there was the flesh of man.”
Indeed, in a passage which explicitly quoted John 19:34, Origen himself seems to make a similar point against celsus in Contra Celsum 2.36. In this passage Origen sees the water which flowed from the side of the crucified Jesus as a miraculous indication of his divinity.
Celsus had asked, “What is the nature of the ichor in the body of the crucified Jesus? Is it such as flows in the bodies of the immortal god’s”. Celsus had drawn this conclusion in part from the Illiad, where Homer states concerning the wounding of Aphrodite, “and blood immortal flowed from the goddess, ichor, that which funds in the veins of the blessed divinities; since these eat no food, nor do they drink of the shinning wine, and therefore they have no blood and are called immortal.’ As these authors say, Origen counters Celsus’ spirit of mockery but does not deny that the water is a representation of Christ’s diety.
Finally it should be noted that the notion of the water being a celestial substance which was part of Jesus’ make-up is not as far-fetched as may appear at first sight. After all, it is apparent from certain Jewish cosmogonies that water is one of the pre-existent substances which is used to make the world. It is not inconceivable therefore, that the author of 1 John wants to make the point that, as well as a celestial substance, there was human blood in Jesus’ veins.
