When hand stitching, I usually use only one needle. I stitch all the way around the seam until I come to where I started and then go back over the seam again, filling in the spaces left from the first time around.
The thread ends may be knotted, snipped off short, and then melted with a match, or you can simply stitch back over the seam for a few stitches, snip off short, and melt. I like to leave all knots or melted ends on the outside of the sheath, since if left on the inside, they may rub on the knife, leaving a mark.
If you find that it is difficult to pull the needle through using just your bare fingers, it is best to use a small pair of needle nose pliers to assist, rather than to do a lot of side to side wiggling of the needle. I speak from experience - it is easy to beak a needle. You may not need the pliers for this seam (you’re only going through two layers of leather right now), but you will likely need them later when stitching the main seam that is three layers thick.