Cool. Bristleworm spawning is a logical guess. My online research found several videos of Bristleworm spawning. All were white:
The source of the red cloud may have been some other kind of polychaete worm or invert, like a peanut worm or a burrowing clam, living in the rock. What time of day/night did this happen? Closer/longer observation may reveal the animal.
Gotta love it.
Aloha,
Mark