The Royals keeper has made headlines with a number of impressive displays, most recently during Saturday's 4-2 win at Fulham and the 0-0 draw against Liverpool on April 13.
"He's unbelievable, definitely a future England No.1," Karacan told reporters. "I think we've all said it. I'm surprised that the likes of Jack Butland have been called up to England ahead of him.
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"It would be a coup if we can keep him but he loves it here and he wants to play games – that's all Alex has ever wanted to do. Obviously there will be clubs knocking on the door but, you never know, if we can guarantee that and give him a lot of games that might be a major factor."
Karacan, who scored his first-ever Premier League goal during the win over Martin Jol's faltering side, believes that his side's upturn is down to new manager Nigel Adkins's recent appointment.
"The difference over the last few games has been amazing," the midfielder said. "The gaffer has come in and given us the confidence to go out there and express ourselves.
"It's nice to play the game and keep possession for a little while. I think the boys were fantastic. We're disappointed to have conceded a couple of goals bu,t when they scored, we went and got another one and I think that shows how much we've improved.
"I've always wanted to score in the Premier League and I'm delighted to have done so. It's been a frustrating year, we haven't been able to control games this season; I think the way we've set out didn't really give us the chance to do that.
"The gaffer's come in and changed the way we're playing with Jobi [McAnuff] playing in the hole now. The boys are really enjoying it at the moment and we want to finish the season highly – we owe that to the fans."