The English defender has been a regular under Mikel Arteta following his recent form.
This has prompted the club to hand Holding a new three-and-a-half year deal until the summer of 2024.
Speaking to The Telegraph, he said a move to the Magpies was near completion just months ago.
“We signed two centre-halves over the summer and I was thinking, ‘am I even going to be involved in this?’” Holding said. “At 25, I have to focus on playing. I spoke to the manager and said there was a loan opportunity that had come up, that I needed football. After my injury [a ruptured anterior cruciate ligament in December 2018] I needed a year to play.
“It was all agreed, and the club thought it would be the best move for me, but in the week before the Community Shield against Liverpool, [head coach Mikel Arteta] pulled me aside and said he wanted to check that I was focused for the weekend because I was needed.
Holding has gone on to start 13 Premier League matches this season, including 10 of the last 11.
He continued: "I told him that, wherever I am, I will always play my hardest and put 100 per cent in.
“I played the game, we did well and we won, and then on the Monday, he called me into his office. He said it made no sense to let me go if my end goal was to play here. He was saying I was going to play, that it was my shirt to lose. That was the confidence he put in me."
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