The Sun has claimed that the Reds are preparing a £42 million bid for the 20-year-old prospect, who has enjoyed an incredibly successful start to the season.
Caicedo joined Brighton in February 2021 for £4.5 million from the Ecuadorian side Independiente (Transfermarkt), before he was sent on-loan to Belgian club Beerschot.
The young midfielder made eight appearances for the Seagulls last term but has played in every Premier League encounter so far this term. His high-energy performances in midfield have attracted the attention of some of England's biggest clubs.
The Ecuadorian international still has three years left on his contract and has become a key part of Graham Potter's midfield, so he will not be cheap to price away from the Amex Stadium.
Caicedo would be a welcome addition to Liverpool, who are in the midst of a midfield injury crisis. Thiago Alcantara, Naby Keita and Alex Oxlade-Chamberlain are all out, while Thiago, Milner and Henderson are in their 30s.
Many believe that the Merseyside club are in need of another option in the center of the park to compete for major honors this season, while also bringing the average age down.
Brighton boss Graham Potter states intention to keep star midfielder amid Liverpool rumors
Caicedo is a highly promising prospect, who can play in defensive midfield as well in the number 8 role. Speculation has surrounded the tenacious South American in recent weeks, but Potter has attempted to quash any talk of his wonderkid leaving the South Coast.
With clubs such as Manchester United and Liverpool reportedly interested, the English boss was asked about Caicedo's future.
He stated (as per The Manchester Evening News):
"He is a really humble person. Loves playing football, is really low maintenance as a player, and just wants to join in football with his teammates. He is really enjoying his football as you can imagine. He is only young but he has got such a high possibility. We love him here."
Potter further added:
"In regards to speculation, it is what it is. When the transfer window is open you always get that stuff but he is really enjoying his football here and we are really enjoying having him."