The Blues have disappointed in their defence of the Premier League title, as they sit 12th in the table after 26 games - 20 points behind leaders Leicester City.
A lacklustre league campaign has subsequently increased the pressure on Guus Hiddink's side to succeed in the Champions League, and although they suffered a 2-1 defeat to PSG in the first leg of their last-16 tie, Blanc saw enough to convince him the English side are getting back to their best.
"This was a very good match from both teams," Blanc told beIN Sports. "Chelsea was said to be in great trouble, they are regaining their colour.
The Cote d'Ivoire international was criticised heavily by Blanc, with the coach saying he will "suffer the consequences" for his "pathetic" actions.
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"We can expect a tough match at Stamford Bridge but I think the Chelsea players will say the same thing."
John Obi Mikel's goal on the stroke of half time cancelled out an earlier goal from Zlatan Ibrahimovic, only for Edinson Cavani to emerge from the bench and bury the late winner for the French side.
While Blanc feels the Nigerian's leveller was the only negative of his side's performance, he singled out Marco Verratti for praise after overcoming a groin injury for his first start since January 13.
"My main regret is conceding the goal in the 45th minute. There was not long to go until half-time at 1-0, but we conceded a corner and the goal – it's the only regret I have," he said.
"The players are all celebrating, even those who have not played. The mood was incredible.
"Verratti was amazing. He did not even want to leave the pitch. He has no pain and is good for the future."