Demirbay missed the first four Bundesliga games of the season due to torn ankle ligaments but he has since played seven games in all competitions.
He has provided one assist in the Bundesliga, and two in the Champions League - against Manchester City and Lyon - and can play as an attacking midfielder, a central midfielder and a defensive midfielder.
"Of course, I can handle that," Demirbay told Sky Sport in Germany when asked about the rumours of the Reds' interest.
However, the 25-year-old may well have harmed his own chances of moving to the club.
Demirbay says he operates best in a deep-lying role, though Liverpool spent big to secure Fabinho from Monaco in the summer, and also have Georginio Wijnaldum and Jordan Henderson who can sit in front of the backline.
Asked about his favourite position, he said: "I feel very, very well (as a) No.6.
"That’s where I can set the pace for my team.”
It remains to be seen whether Liverpool will again invest heavily in their team in January, having spent big in the summer.
The likes of goalkeeper Alisson, central midfielders Fabinho and Naby Keita, and winger Xherdan Shaqiri moved to Anfield, with Jurgen Klopp backed to the tune of over £100 million ($128m).
The Reds are now second in the Premier League and are one of three unbeaten sides, along with Manchester City and Chelsea.
Hoffenheim, meanwhile, are eighth in the Bundesliga.