After a number of games without a win, I think Manchester City will find a way to get a win. The match against Liverpool will obviously be difficult to win, but I don't think it's impossible. So it's true as you said, if Manchester City wins then it will be a turning point for Manchester City to get its performance back. But if Manchester City loses, it is very likely that Liverpool will win the title at the end of the season.
Liverpool on the one hand has home advantage which will make them favorites to win. Not only that, the different performances of the two also become a benchmark for analyzing the match. Liverpool has a high probability of winning, but I think it's still not certain that they will win.
City really need a win and beating Liverpool now would be very appropriate, but Liverpool are too good to let them win so easily. I think both teams are capable of scoring in this game, but it is also important how City defend, because they have started to make too many mistakes. If Liverpool can maintain the 8-point gap after this game, or even beat City, then I think they will not miss their chance this season.