When using a long sleeve, you will need to hem the widest side (this will be the open part of the hat). Use a zig-zag stitch so it will still stretch easily. Choose how you want the top to look. There are many possibilities here - you can just round it out, do a long point, or here, I sewed "bunny ears" that can be tied in a knot, like so:
Short sleeve tees work really well too, especially since the end of the sleeve is wide and can be used as the hat bottom, no hemming required. Just finish off the top and you're done!