Here's how to make a knitted scrunchie! For the pictures I used Vel-Luxe lion brand yarn to create the classic velvet scrunchie look, however this pattern will work with most yarn. This pattern is super easy and is a great beginner project. They also make fantastic gifts. So let's get started!

Abbreviations:
St st - stockinette stich
p - purl
k - knit
rep - repeat

Supplies

7.50 mm knitting needles
Yarn
Scissors
A Hair tie or some kind of elastic band
Needle and thread

Step 1: Knit

Cast on 40 stitches
Row 1: k St st 40 stitches
Row 2: p St st 40 stiches
Rows 3-8: rep rows 1-2
Bind off all stitches

Step 2: Assembling the Scrunchie

Fold your knitted strip around the hair tie or elastic band.
Thread your needle and tie both ends of the thread together.
On one end of the knitted strip, insert the needle and loop the thread back through it's self so that your thread is secure.
Sew the knitted strip around the hair tie.