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In terms of the progression of the story, Jim's hand is cached with old black blood and new red blood--making it quite a gory sight. On another level, however, this mixture of the "two bloods" might parallel the heinousness of Henry's opinion of the "red badge" as a positive symbol. When he realizes that the new blood is destined for the blackness of the old blood, the scene is disgusting. This is very similar to the way in which Henry's opinion of the "red badge" as the story progresses.