The hat is shaped by knitting what's called short rows. You only knit part of the rows to make the center deeper than the edges, that's why you have those loops.
When you do short rows. you work like this (just an example)
3- . ....kkkkkkkkkkkkkkkk
2- . ..kkkkkkkkkkkkkkkkkkkk
The end stitches are not knit for as many rows as the center stitches. You'll see it take shape as you go.
"Trust the pattern!"
Time flies like an arrow, but fruit flies like a banana.
Hop aboard while we follow the cloud-covered van of knitting harmony, man!! Woooo!! --Hedgehog
IngridKH on Ravelry