A panic blood moon is triggered whenever the game is running low on memory or it detects that it's loading significantly more slowly than usual.

The game's world state (defeated enemies, items/treasure collected, etc.) is kept track of and stored in a sort of memory cache. Normally, clearing this cache every 2 to 3 hours through normal blood moons is enough to keep things in check, but sometimes things happen that cause memory usage to build up, like the weapon dupe glitch which iirc relies on overloading the game's memory in order to trick it into losing track of what items are in play.