Anyway, by the time next Smash rolls, Genshin would've aged like Minecraft, right? Wouldn't it have upper hand against series like Halo which doesn't have strong footholding in Japan?
It really depends. Minecraft was a huge deal because of it's innovation and allowed for alot of creativity despite it's simplicity. It spawned it's own genre and was a big game changer for sandbox games. Not to mention the "Youtube Days of Minecraft" where that spawned many content creators and pressured many currant creators into doing Minecraft stuff. Maximillian Dood explicitly mentioned this time when talking about Steve's appearance in Smash Bros. Minecraft wasn't a game that was simply popular. It was one of the biggest gaming revolutions of it's time.
Genshin, while popular, doesn't do anything that different from the games it was inspired from, aside from the Gacha elements. That's really Genshin's biggest thing is that it's an 3D Adventure game with Gacha elements. But it doesn't do anything game-changing for it's genre or whatnot otherwise. Remember when Genshin Impact was first revealed. Many Chinese players were comparing it to Breath of the Wild to the point where they were literally holding up their copies of Breath of the Wild towards Genshin in a very bitter tone. That didn't stop Genshin from becoming popular when it finally released and it certainly helped that Genshin was F2P, allowing it to be available widespread.
But compared to Minecraft, where it's popularity was because of it's uniqueness, it's gameplay, it's simplicity and it's innovation, alot of Genshin's popularity comes mainly from the characters, it's environment and map, its art style, its freedom of how you want to play and being accessible on a whole bunch of systems including mobile. And most of those positives are also what made Breath of the Wild such a huge deal, with the only upside it has over Breath of the Wild being it's F2P nature and accessibility. Does that make Genshin's popularity less-earned than Minecraft? No it doesn't. Popularity is not restricted to games that only manage to do great innovations. But it does make the differences behind each games' popularity quite clear.
And that difference can be key on whether or not they are chosen for Smash Bros. Remember that Sakurai doesn't choose characters strictly from popularity, but on what he wants to do with them and what unique stuff they can bring. Minecraft is a no-brainer. With Genshin, you can definitely make either argument that Genshin can bring something unique or there are other similar games that have characters that can do something similar/bring something just as or more unique compared to Genshin and without having to pay extra for another 3rd Party.
Genshin will be up there on the most likely list of 3rd Parties, especially if it's popularity sticks around, but we have said many times about different 3rd Parties that they are a guarantee and yet they were not. Franchises like Monster Hunter, Halo, the Tales of series, etc. Is Genshin a possibility? Of course. Is it a guarantee? Much like the other series we claimed were guaranteed, it's not guaranteed.
And Halo does have a dedicated community in Japan. I mean, it has to have a notable one when I remember seeing game sites, including Gamespot IIRC, reporting on how the Japanese were very disappointed in the JP voice change for Master Chief when Halo 4 came to Japan. While FPS may not be popular in Japan, that does not mean there aren't FPS that don't get attention in Japan.
Dead Space is a very notable one, where despite it being banned in Japan, it was loved by Japan so much the Japanese fanbase made a dedicated JP translation for all of the Dead Space games. And Isaac Clarke had a typed emote(or whatever you call those images created using keyboard buttons) based on his helmet in Japan. Half Life has also gotten attention in Japan, including it's own Arcade game in Japan. And even Sakurai made comments about Half-Life and it being rather "Nintendo-like".