The Imps are the first non-league team to reach this stage of the competition for 103 years, but must overcome 12-time winners Arsenal if they are to continue their dream run and reach Wembley.
However, with questions being asked of manager Arsene Wenger following a 10-2 aggregate defeat to Bayern Munich in the Champions League, Waterfall believes that his side could use the pressure on the Frenchman to their advantage.
"He's under pressure. Some Arsenal fans might be going there wanting us to win. If we start well, we might have 60,000 people behind us, not just 9,000," he told reporters.
"We'll go there believing in ourselves. We won't park the bus, we'll play our usual game. We want their big players to play. Their manager is under pressure so I would expect their big names to play."
Waterfall also revealed that his side have taken inspiration from Barcelona's miraculous comeback against Paris Saint-Germain on Wednesday as the Spanish giants scored three times from the 88th minute onwards to seal a 6-5 aggregate triumph.
"If they can do what they did, why can't we beat Arsenal? People thought we couldn't beat Burnley," he added.
Eighty-eight places separate Arsenal and National League leaders Lincoln in the football ladder.