Real Madrid have reportedly ended talks with Liverpool regarding the potential transfer of Alexander-Arnold, as per Spanish publication Nacional.
This decision comes after Liverpool demanded €90m (£77m) for the right-back, a fee that Real Madrid boss Ancelotti is not willing to pay.
Despite Alexander-Arnold being a long-time target for Real Madrid president Florentino Perez, Ancelotti has made it clear that he does not see the England international as a necessary addition to the squad.
The Italian manager believes that Alexander-Arnold is too inconsistent and prone to defensive errors. Perez, however, is not completely ruling out a future move for the player, suggesting that the situation could change in a year when Alexander-Arnold becomes a free agent.