Whenever you have two Modern English words that mean almost exactly the same thing, it is probable that only one existed in Old English, while the other was imported from the Romance languages, there having been several such bulk imports in English's history. This appears to be the situation with holy and sacred: the former is Old English, the latter comes from Latin sacer by way of French sacre and the oldest citation in the OED is 1380 (referring specifically to the Eucharist).
Whenever you have a question of English etymology, the canonical reference is the Oxford English Dictionary. This is what it says about the etymology of holy; note the explicit comparison to sanctus, sacer.
holy, adj. and n.
Etymology: Old English hálig, -eg (in inflection contracted to hálg-), also Northumbrian hǽlig (whence northern Middle English hely), Old Frisian hêlech, Old Saxon hêlag, -eg (Middle Dutch heilech, -egh-, Dutch heilig), Old High German heilag (Middle High German heilec, German heilig), Old Norse heilagr (Swedish helig, Danish hellig) < Old Germanic type *hailag-oz, the sense of which is expressed in the Gothic of Ulfilas by weihs (but hailag, apparently ‘consecrated, dedicated’, is read on a Runic inscription generally held to be Gothic). A derivative of the adj. *hailo-, Old English hál, free from injury, whole, hale, or of the derivative n. *hailoz-, *hailiz-, in Old High German heil, Old Norse heill health, happiness, good luck, in Old Norse also omen, auspice.
The sense-development < hailo- is not clear, because the primitive pre-Christian meaning is uncertain, although it is with some probablity assumed to have been ‘inviolate, inviolable, that must be preserved whole or intact, that cannot be injured with impunity’, a sense preserved in Old Norse; hence the adj. would naturally be applied to the gods, and all things specially pertaining to them; and, with the introduction of Christianity, it would be a ready word to render Latin sanctus, sacer. But it might also start < hail- in the sense ‘health, good luck, well-being’, or be connected with the sense ‘good omen, auspice, augury’, as if ‘of good augury’: compare Old High German heilisôn, Old English hálsian, to HALSE v., augur, divine, exorcise, etc. The sense arrangement here is therefore merely provisional; we cannot in Old English get behind Christian senses in which holy is equated with Latin sanctus, sacer.