The Reds' vice-captain is in the final 18 months of his current deal, although an extension has been seen as a formality given his importance and connection to the Merseyside giants.
However, as things stand, Liverpool are at risk of losing their academy star for nothing in 2025, meaning that a sale this summer may have to be considered if he does not sign on the dotted line.
Amid the current uncertainty, La Liga leaders Real Madrid have apparently taken an interest in signing Alexander-Arnold this summer as they plan for life without the ageing Dani Carvajal at right-back.
It has been claimed that the England international is delaying talks over a new Liverpool contract, offering Real Madrid a fillip, although he is simply focused on a strong end to the season before thinking about his future.
Alexander-Arnold "flattered" by Real Madrid links
Talks between the club and Alexander-Arnold's representatives are expected to take place once the campaign comes to an end, as Liverpool have no intention of parting ways with the defender.
According to Football Insider, Alexander-Arnold is indeed "very keen" to prolong his stay with the Anfield giants, whom he has represented for 20 years since joining as a schoolboy in 2004.
The report claims that the 25-year-old is "flattered" by Real Madrid's interest in his services, but he is not giving serious consideration to joining Los Blancos and hopes to find a swift agreement with Liverpool.
New sporting director Richard Hughes and Michael Edwards - who has returned to Liverpool's owners Fenway Sports Group as their new CEO of football - will supposedly have key roles to play in tying Alexander-Arnold down to new terms.
The right-back is said to pocket £180,000 a week under his current agreement, but he could be in line for a pay rise to reflect his growing importance, having been appointed Virgil van Dijk's lieutenant last summer.
Which defenders could still leave Liverpool this summer?
Alexander-Arnold is still on the mend following a severe knee injury but already has two goals and 10 assists under his belt in 29 matches this term, taking his total for the Reds to 18 goals and 82 assists in 302 contests in all tournaments.
While the Premier League and Champions League-winning full-back is unsurprisingly set to pen an extension at Anfield, Liverpool are expected to undergo a mini defensive revamp after rejigging their midfield to good effect in 2023.
Experienced centre-back Joel Matip is now in the last three months of his contract with the Reds and may have already played his last match for the club, having picked up a season-ending knee injury in December.
Jurgen Klopp, also bidding farewell to the Reds this summer, hinted after Matip's ACL rupture that the Cameroonian should be offered a short-term renewal, but no talks are thought to be scheduled at present.
Nat Phillips and Rhys Williams - who have failed to become regular fixtures for Klopp since their heroic exploits in 2020-21 - are likely to leave, though, while the forgotten Sepp van den Berg has admitted that he may need to consider an exit too.