There's a couple ways to limit the wabble, depends how your finished product is constructed. A simple way is to, on the backside of the sheath, the part that will typically be next to your body, place a small piece of wet, not dripping sponge, about the size of a nickle. Place the wet sponge  near but not at the top of your sheath. What you're trying to achieve is a localized area of softened rawhide. You just need it soft enough in one area to start off with.  
When this area is soft, may only take thirty or more minutes, use something hard and rounded about the size of a pencil and work in a depression into that softend spot of rawhide. You're trying to make an indentation on the sheath. Once you have an indent then place something like a marble in that spot and lightly wrap it to keep it in place and maintain the shape of your depression. I usually use an Ace bandage or other elastic-type wrap, rubber bands.  
Looking inside the sheath you should see that area where the marble or other object is pushing into the sheath. This is making a pinch point to hold the blade. Let it dry without the blade in the sheath. Be careful not to wrap your sheath too tight. This will give you a small area that will better grip your blade and keep it from rattling inside the sheath which can be very annoying. Another way is to use a small tab of thin leather inside the opening of the sheath. This will grip your blade as well. You can use both methods. Tightening up the sheath as I described can be done and it won't alter the look of your sheath.  
I don't know how your sheath was made otherwise I could give you additional suggestions or more information on how to place a tab at the opening and top of your sheath, maybe even adding a differnt and very cool look to it.

Thanks for the advice, Pikaru.
I don't have it with me now (sheath knives are forbidden at Scout camps) but I'll be home this weekend and will try to pinch point method.  
Greenman, when I'm home, I'll take a picture of the knife and the sheath.

Backside of the sheath

Looks great bro! Good to hear from you again, Not sure if you heard, the writing deadline for The Guide is August 19th.
 
Good looking sheath, I'm sure it will serve you well. A little leather dye would make it look even better IMO.

Great, thanks! I set it up so you'd have some time if you needed it after your internship. But if you have it earlier that's even better.
 
Looking forward to it!

Thanks for the complements and the advice! I think I will just let nature take its course. After all, that's the whole point of natural materials and hand crafted things IMO