The rumor is logically sound at least; in that Monolith likely have another project in production already. The number of staff credited on Xenoblade 3 leaves plenty unaccounted for; plus Koh Kojima isn't involved with Xenoblade 3’s story DLC (he stuck around for Torna), and Yasuyuki Honne isn’t credited on Xenoblade 3 at all, two major figures for Baten Kaitos.
It does make you think though; if this rumor and the F-Zero one are true,
what did that investor know… Maybe Wario Land, Card Hero, The Frog For Whom the Bell Tolls and Chosoju Mecha MG will show up in the rumor mill soon