Speaking before the game, Nagelsmann had been dismissive of the effect playing at Anfield would have on his team.
But the 30-year-old changed his tune after Jurgen Klopp's men had inflicted a chastening defeat.
Asked what was going through his mind after Liverpool's blistering opening, Nagelsmann said: “My thought at the time was 'well, this could be going better'. The reason was we didn't start the match well at all.
“The first couple of minutes were already very challenging. They got a free-kick on the edge of the area, we made two or three poor tackles, the crowd could sense that and really got behind Liverpool and you know that's how atmosphere builds here.
“We were running around like headless chickens. The team showed a bit too emotion and we left too many gaps.
“The additional factor was that in the first 30 minutes there were two or three players who weren't on the pitch at all. If we'd played the way we did against anyone, we'd have lost 4-2.
“Liverpool played the way they did in the first leg and scored the goals exactly the way they do in the Premier League.
“The difference was in the first leg we played well and tonight we didn't."