Klopp's men had not lost at Anfield for 14 months in all competitions prior to a 3-0 defeat to Atalanta in the Europa League quarter-finals on Thursday.
The German did not get the reaction he hoped for as Palace took an early lead through Eberechi Eze in a ragged first-half display from the home side.
Liverpool were much improved after the break but were undone by a familiar wastefulness in front of goal in recent weeks as Palace clung on for just their second win in 10 games.
"It feels rubbish, 100 percent," said Klopp. "The first half cost us the problems we couldn't sort in the second half.
"First half we wanted to show a reaction from the last game. We saw a reaction, just not the one we wanted. You could see the team was not fully convinced. We lacked conviction."
Defeat leaves Liverpool two points adrift of Manchester City with six games of the Premier League season to go.
Klopp's men have three away games before they return to Anfield, playing at Fulham, Everton and West Ham over the next two weeks.
And the Liverpool boss knows they must recover top form to stand any chance to ending his reign by winning just a second league title in 34 years.
"It depends on us what it means. If we play like in the first half why should we win the league? If we play like in the second half, we can win football games -- we will see how many.
"If we play to our full level then we are a force but today we played a bit inbetween and that's why we lost."
Liverpool have now won just three of their last eight games in all competitions and Andy Robertson lamented a loss of form at both ends of the field coming at the business end of the season.
"We are struggling to keep clean sheets right now. I don't know how many we have had in the last 10 or 15 games but it won't be many," said the Scotland captain.
"When you do that, you have to take your chances. As simple as that."
Darwin Nunez, Diogo Jota, Curtis Jones and Mohamed Salah all missed glorious chances to at least salvage a point in the second half.
"Since we came back from international duty (in March) we've probably not been as clinical in front of goal, which when you are going for titles and trophies it's not a great thing to have," added Robertson.
"We're obviously off the boil in front of goal. That's two games now no goals at Anfield which is very, very rare."
