most do hide during the day but channel cats are more active during the day than most species. hiding holes in the lowest spot in the pond will take first choice by them, It's cooler there of course. don't worry about the ones hiding in the folds, if there isn't enough oxygen they will move and find a place that does but in most cases they would be moving water in with their fin motion and actually keep it from becoming a stagnant area. I'm personally getting away from cinder blocks because I have found that the edges can be very abrasive and will scratch the fish up, catfish included, but koi even worse. Plus they can raise the PH if not well cured. In the wild they prefer large over hangs, A large flat rock sitting on a plastic milk carton would probably be a better choice, If you want it to where the cat fish can use the crate then just cut a larger opening in one side, if not leave it like it is and the smaller fish can use it for a getaway spot in the shade too.