Bloodweave is wool imbued with blood magic (10 blood) at the Altar of Blood. It can be used to make bloodweave robes and has a slightly different texture from red wool if you feel like decorating.
Bloodweave robes make the effects of drinking blood from the Bloodkeeper to change. The hunger still remains, but you gain a minute of buffs; Speed and Strength IV, turning you into a Glass Cannon of sorts. They provide the same protection as Leather Armor. The effects vanish if you remove the robes, and you must wear a whole set for it to have any effects.