Yes, catfish do dig holes and burrow into the water bottoms.

Where do catfish live in holes?

10) Deep Holes In Ponds

During most seasons, you'll find pond catfish (typically channel cats and/or bullheads) lying in the deepest water, usually close to the levee or dam if one is present. Cats abandon these structures only when oxygen levels fall too low, such as when a pond stratifies in summer.

Do catfish like deep holes?

During the day, look for catfish in muddy water areas, such as a tributary and its outflow. Also good are deep structures, like river bends, the base of drop-offs, deep holes, and humps. Catfish will also hold around cover, like standing timber and deep weed edges. Night brings excellent fishing.