He recognized it as wine.
Luke 22:17-18 And he took a cup, and when he had given thanks he said, “Take this, and divide it among yourselves. For I tell you that from now on I will not drink of the fruit of the vine until the kingdom of God comes.”
The whole passover meal was one of remembrance. They didn't actually drink blood as it is forbidden in the Law. They would have been lawbreakers. Had Jesus given His disciples His actual blood to drink, or had they even thought it was actual blood, they would have not drank it.
Peter himself said that he had never eaten anything unclean. Eating blood would have made him unclean so as an observant Jew, he would not have done it.
He also called Himself "the true Vine."
Moreover, He said it was His blood. You have to conclude that it was, unless He had very poor command of the language, and thought that "This is My Blood, the blood of the Covenant, which is to be poured out for many for the forgiveness of sins" meant "This is NOT My Blood."
And He said the same would be "poured out" for the forgiveness of sins, and that's Blood --- not wine.