Orig. meaning (prob.), To make 'sacred' or 'holy' with blood; to consecrate by some sacrificial rite which was held to render a thing inviolable from profane use of men and evil influence of men or demons. (The streaking of the lintel and doorposts with blood, Exodus xii. 23, to mark them as holy to the Lord and inviolable by the destroying angel, was apparently the kind of idea expressed by blóedsian in pre-christian times. Cf. also the history of the Latin words consecrāre and sacrificium.)Note that the etymology is about blood:
Old English blóedsian , blédsian , blétsian : not found elsewhere in Germanic, but formed on the Germanic type *blôdisôjan , < *blôdo-m (Old English blód ) blood... The etymological meaning was thus ‘to mark (or affect in some way) with blood (or sacrifice); to consecrate’. But the sense-development of the word was greatly influenced by its having been chosen at the English conversion to render Latin benedīcere , and Greek εὐλογεῖν , which started from a primitive sense of ‘speak well of or to, eulogize, praise,’ but were themselves influenced by being chosen to translate Hebrew brk , primarily ‘to bend,’ hence ‘to bend the knee, worship, praise, bless God, invoke blessings on, bless as a deity.’ Hence, a long and varied series of associations, heathen, Jewish, and Christian, blend in the English uses of bless and blessing.... At a very early date the popular etymological consciousness began to associate this verb with bliss n. ‘benignity, blitheness, joy, happiness,’ which affected the use of both words...Ah! That connects nicely with yesterday's discussion of the necessary connection between religion and happiness.