How do I hide iTunes music purchases on iPhone ?

The ability to enable/disable showing iTunes purchases still exists, but it’s now in the iTunes app itself.
Launch the app and then click on the pull down which allows you to select iTunes listings like by artist, album.
In the picture below, tap the red Artists word just below the album art.

This will bring up this menu, scroll to the bottom,

and slide the Only Offline Music to the on position.