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.
Liverpool this season has turned into a favorite team to win, they have performed consistently in all competitions. Liverpool journey in the Champions League is perfect, they can easily qualify for the last 16 when other big teams are having difficulties. The decline in performance experienced by favorite teams such as Real Madrid and Manchester City, opens up a greater opportunity for Liverpool to become champions this season, Arne Slot will certainly take advantage of this momentum very well.
If they continue in the same performance, it is clear that Liverpool is very ready to face any team, they are quite lucky because they have not experienced player injuries. However, Liverpool journey has the potential to be disrupted by rumors of the departure of several key players, Liverpool management should immediately resolve this quickly so that the players focus is not divided. Overall, Liverpool is on the right track to achieve success this season.