Cast on 32 sts. Place marker for beg of rnd. Join by working the first st on left hand needle with the working yarn from the right hand needle and being careful not to twist sts.
Rnd 1: *K3, p1; rep from * to end of round.
Rnd 2: P1, *k1, p3; rep from * to last 3 sts, end k1, p2.
Rep Rnds 1 and 2 until piece measures about 8 in. (20.5 cm) from beg.
Shape Crown (top of Hat)
Note: When working the next rnd, we found that the sts were so stretchy that they still fit around the circular needle. If this does not work for you, you may wish to change to double pointed needles.
Rnd 1: *K2tog, p2tog; rep from * to end of round - 16 sts at the end of this rnd.
Cut yarn, leaving a long tail. Thread tail through remaining sts and pull to gather. Knot securely.
Weave in ends.