Can excessive squatting cause hip burcitus?

It can happen. Any activity done to excess can result in symptoms of pain. The friction from squatting may lead to symptoms of bursitis, however, activity modification, rest, ice, and the occasional use of anti-inflammatory medication, such as ibuprofen, should resolve the issue.
Hip Bursitis. Yes, the most common causes of bursitis are repetitive motions or positions that irritate the bursae around a joint. The most common bursas involved around the hip are at the greater trochanteric area were the hip abductors cross to insert. Also the anterior hip has the iliopectineal bursa under the iliopsoas muscle (this is a hip flexor).
Bursitis. Absolutely. The most common cause of any bursitis is repetitive motions or positions that irritate the bursae around a joint. Hip bursitis typically occurs due to repetitive running or walking (especially up hills or on uneven surfaces) jumping, squatting, lunging activities (placing strain on the bursa via the gluteals) or due to prolonged pressure on the bursa (such as excessive side-lying).