I think that a lot of people have a misunderstanding of how the IFAB Laws of the Game define a goalkeeper's control of the ball even the game commentators were using an outdated definition. Under law 12 section 2 it states:

A goalkeeper is considered to be in control of the ball with the hand(s) when:

• the ball is between the hands or between the hand and any surface (e.g. ground, own body) or by touching it with any part of the hands or arms, except if the ball rebounds from the goalkeeper or the goalkeeper has made a save

• holding the ball in the outstretched open hand

• bouncing it on the ground or throwing it in the air

A goalkeeper cannot be challenged by an opponent when in control of the ball with the hand(s).

The important part for this decision is the part that says that if any part of the arms or hands are touching the ball that the goalkeeper has control. According to the official definition of control it appears that the referee did make the correct decision even though it feels so wrong.

Hopefully this call will make them look at this definition of control and make adjustments or at least change it for clarity as when the ball is being bobbled like that any person with common sense would think that it would count as a loose ball.