The blue Ken represents Dan Hikibi, a Hong Kongese martial artist of Japanese descent who trained alongside Ryu and Ken and wears a similar outfit.
The stage represents Suzaku Castle where Dan trained alongside Ryu and Ken before his expulsion by his master Gouken.
The second battle condition references Dan's tendency to taunt his opponents during combat.
Other trivia:
This spirit's Initial Damage 30% ability reference how Dan is designed to be an intentionally weak "joke" character.
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Seeking revenge for his father’s death, Dan Hibiki sought strength, training under the same master as Ryu. However, he was expelled once his motives were revealed. Instead, Dan created “Saikyo-style,” based on his limited knowledge of Ansatsuken and Muay Thai. The only problem? He can barely throw a punch! Despite his constant taunting, Dan’s no Ryu, with his moves being incredibly weak and ineffective.