1. To recognize or detect a weakness or vulnerability (especially a new one) in an opponent, adversary, or subject over which one is trying to gain an advantage. The phrase implies that such a weakness will then be acted upon to gain victory or advantage. Likened to the literal presence of blood in water detected by aquatic predators, such as sharks. The visiting squad is starting to look tired, and the home team smells blood. Look for them to try to close out the game. Do not give any indication that we are willing to settle. If we do, the attorneys will smell blood and we won't get what we want.

2. To be ready, willing, and eager to attack or fight. I could sense that the drunken mob was smelling blood, ready to inflict violence on whomever they encountered.