Pep Guardiola insists Real Madrid's exit does not make Manchester City's task in the Champions League any easier.
The holders were surprisingly eliminated by Ajax at the last-16 stage last week, while another fancied side in Paris St Germain were also beaten.
But Guardiola, who maintains his team are still a junior outfit in European terms, says that does not mean the competition is opening up for quadruple-chasing City.
Guardiola said: "If people think Real Madrid is out so it will be easy, it's because they still don't understand this competition.
Dreams DO come true! 🤤#UCL #reaaja pic.twitter.com/TOmJcGz824 — AFC Ajax (@AFCAjax) March 5, 2019
"Of course, it's incredible – four times winner in five years, three in a row. It's the best team in the last decade. It's incredible what they have done. I thought they were the favourites.
"Hopefully we can be in the quarter-finals but the teams will be of a similar level to Real Madrid because they are top."
City still have work to do to secure a quarter-final place after requiring a late fightback – with 10 men – to beat Schalke 3-2 in the first leg of their last-16 tie. The sides meet again at the Etihad Stadium on Tuesday.
Guardiola said: "I think a week ago we didn't expect PSG would happen, or Real Madrid.
"People say there is nothing to do but one red card, one goal in the first minute – many things can happen in 90 minutes in this kind of competition.
"I would say we are quite lucky that we played 10 v 11 for 23 or 24 minutes 2-1 down. Normally, in those circumstances today you are almost out of this competition. We were lucky, really. We still have a job to do."
City have won three Premier League titles since 2012 but are still to transfer their domestic success to the European stage.
They are yet to progress beyond the quarter-finals under Guardiola and their best showing remains their run to the semi-finals in 2016.
Guardiola said: "We are teenagers in this competition, that's what I feel but we want to win it, we push ourselves. The best way is to feel this kind of pressure.
Ready for some more big moments on Tuesday night?! ⚽️#cityvs04 🔵 #mancity pic.twitter.com/2QzmJy2d4R — Manchester City (@ManCity) March 11, 2019
"We have to dream and point as high as possible. At the same time, we have to accept there are other teams thinking the same with a lot of quality and a lot of talent."
Guardiola believes City fans' love of the Champions League is growing. The supporters have been slow to embrace the competition, not helped by their open dislike of organisers UEFA, which manifests itself in the booing of the anthem.
Guardiola said: "I think the last time there were less boos. My feeling is now the people are starting to enjoy this competition. They are feeling like we can do it together. That is what we want."
Guardiola, who dismissed reports linking him with Juventus at the weekend, reiterated his determination to see out his contract with City.
"I have two more years, I'm going to be here and the future (after that) I don't know," he said.
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