Mark Warburton believes Rangers showed the gap between them and Celtic is not as big as some think despite their 1-0 Old Firm defeat at Hampden.
The Ibrox side produced a far better display and were much more organised than they had been as they lost 5-1 in the Premiership at Celtic Park last month.
Playing this time in the League Cup semi-finals, it took a Moussa Dembele goal three minutes from the end to finally defeat Rangers.
Celtic were stronger for much of the game, enjoying far more possession and creating three times as many chances, but the dogged spirit Warburton's team showed kept the tie alive.
He told RangersTV: "I hope you saw players being brave. Every team can improve but players stepped in, we worked hard and we created some very good chances in the second half.
"We've got to look at today's performance and the many positives to come out of it. It was an open second half, although we felt we went too long too often.
"We have to recognise what we can do better - that's why we're here, to get better every single time - but in general there were many positives which we need to take forward now.
"All over the park we had good performances and I was delighted with the substitutions and the energy they added.
"We've lost a game of football but I hope very much that this so-called gap is a lot narrower than people think."
Rangers relied largely on goalkeeper Matt Gilks to keep them in the game and he produced a string of good saves to keep the game scoreless for so long.
It took a moment of class from scorer Dembele to finally beat the former Scotland goalkeeper and Warburton praised his display.
He said: "Again, he's been asked to be brave on the ball and he's been asked to wait for his chance with Wes doing so well in front of him.
"Gilksy's been first class. He's a top class pro with a tremendous CV so there's no hesitation at any time in any game."
Rangers now find themselves with two derby defeats to Celtic and have slipped to fifth in the Premiership after St Johnstone defeated Dundee 2-1 to overtake them.
A mixed first few weeks of the season have brought difficulties for the former Scottish champions but Warburton is now optimistic of building momentum.
His team now has home league matches with St Johnstone and Kilmarnock to look forward to and he added: "We've just lost a semi-final to Celtic at Hampden.
"You can imagine the emotion but we can't afford to have any hangover from today with two important league games coming up.
"I was very pleased with many aspects of today and we have to move forward now and focus on Wednesday night."