The German Under-21s captain - who could have played for either England or Germany - is nearing the end of his contract with Schalke, and Goal.com understands Liverpool are interested in securing his signature.
However, the 22-year-old creative force could well end up playing for bitter Merseyside rivals Everton, such is his love for David Moyes' side. His Liverpool-born father Chris, a former English soldier, is a lifelong Everton fan who passed his passion on to his son.
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"We will see when it happens. Everton are close to my heart and I always loved watching Arsenal because of their style of play and some of the players they've had," he told Mirror Sport.
Holtby's Schalke contract is set to expire in the summer of 2013, and if he decides to move away from the Bundesliga, a host of clubs will be ready to snap up a bargain deal.
And the midfielder revealed he could have been starring for Roy Hodgson's national side, had the FA approached him before he began playing for Germany's youth sides.
"I was brought up in Germany, but I always supported England because of my dad.
"Nobody from the English FA got in contact and it was probably too late anyway. Once I played for Germany Under-18s, that was probably it – I would have felt a traitor changing shirts."
Holtby's eligibility for England expired in June last year, but Arsenal fans will get a taste of the creative midfielder's talents when they host Schalke in the Champions League on Wednesday night.
And despite opting for Germany, Holtby can remember the pain of England's defeat by his chosen side at Euro 96: "I still have tears in my eyes at the thought of England losing the penalty shoot-out to Germany.
"I played my first game for Germany with the Under-18s in 2007 and at first it did feel a bit strange. My dad started calling me 'Fritz'!"