Yes, the British Museum online said it was for holding water.
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There were very few small hand held, portable "bottles" at the time as they were determined not to be cost effective given the very little volume they would hold. Instead, an "Amphora" (Plural: amphorae) was used to transport fluids. An amphora was similar to the size of a modern day flower vase with handles on either side. Drinkable fluid from an amphora would be poured into a small "Kylix" which is the most direct equivalent to a small drinking cup.
In Greek mythology cup bearers were an important position. The name of the god who performed that service was Hebe. She moved on from that position when she married the demigod Heracles.
Hebe was the Greek goddess of youth. She was the daughter of Zeus and Hera. She was also the cup-bearer of the gods until she married Heracles (Hercules).Hebe was the Greek goddess of youth.
Hebe, Greek goddess of Youth, is most well known for the Cup, with which she served the gods and goddesses on Olympus.
In Greek mythology a crow is sent to fetch water for Apollo, but it rests instead. After finally getting the water in a cup, it takes back a water snake as well as an excuse. Apollo saw through this fraud, and angrily cast the crow, cup, and snake, into the sky. The constellations of Crater the cup, Corvus the crow and Hydra the water snake are identified with this myth.