The champions league is a totally different atmosphere all together and many teams can attest to this because I have seen many teams that have performed poorly in the premier league but when they get to the champions league the whole form changes and I think Real Madrid is one of those teams. For now even if the draws for the round of 16 comes out I think Liverpool can take on any of the big teams because they have shown that they are stable enough.
Liverpool has shown some very exceptional strength this season and it's actually really helping them as they now obviously have a very notable and significant strength that is probably uncommon with others especially this season and this is obvious in their premier League performance and aswell as their champions League performance so far and just like you have rightly stated, they have that confidence to take on any team at the moment if they are made to face any from the rounds of 16 at the moment.