The Merseyside outfit have played in the elite European competition just once in the last five seasons, but they will need to get past the qualifying round before being included in the group-stage draw.
Ancelotti, whose Bayern side will face Liverpool in a pre-season friendly on Tuesday night, is hopeful that the Reds will be vying for the trophy.
"Liverpool did a fantastic season last year. They played really well," the Liverpool Echo quotes Ancelotti as saying. "They fought for the title, they reached qualification for the Champions League.
"I think the Champions League this year will be more competitive because there are really important English teams in the competition - [Manchester] United, [Manchester] City, Chelsea, Tottenham [Hotspur], Liverpool.
"I hope Jurgen will win in the qualification round and then Liverpool will help make the Champions League more competitive. It will be more difficult to win."
Liverpool have won the European crown five times, with their most recent victory in 2005.