The reason why I don't think Steve is Smash material is 3 fold:
1) Moveset potential - Anybody can say any character with enough artistic license could have enough of a moveset to be in Smash. What matters to distinguish characters, to me, is in judging strictly by what they can do in game, how much moveset potential do they have, and swinging a sword is not interesting. Minecraft is based primarily on crafting, and requires an enormous artistic license to make him have any type of potential. While, of course, Sakurai could have that artistic license, he's not distinguished of the countless other characters that don't easily lend themselves to an interesting moveset.
2) Popularity/Relevance - Minecraft is highly relevant, but I personally feel like, and given the trends happening in the roster, that popularity matters more than relevance. King K Rool is not relevant, but insanely popular among Smash fans. Steve was barely a blip in 2015, when the roster was being made. And still, prior to Hitagi's "leak", Steve was considered a meme character, liked ironically for the lolz rather than genuinely, from what I had seen. Minecraft's relevancy to gaming should not be taken lightly, though, which is why I think Minecraft is much more accurately represented by a stage, rather than a character. But his relevancy is the primary legitimate argument, and if that's the only thing we care about, there's many relevant games that could come to Smash, but still would not make sense.
3) History with Nintendo - While not an absolute rule, it's still much better for a character to have a strong history with Nintendo. Even characters without (1) and (2) are in the game, but we wouldn't expect that from a third party character. And, in fact, the only characters who get exceptions to certain rules, the ones Steve is often compared to, are those with a strong history with Nintendo--Game & Watch, Wii Fit Trainer, Duck Hunt.
There are other reasons. Obviously, I'm biased--I think Banjo & Kazooie is a much better Microsoft pick, given they fit all of these qualities. A two-in-one fighter with flight and projectiles, they've been wanted since Melee, are insanely popular on all of the fan polls, and they were originally Nintendo characters (which is important and incredibly underrated by so many people), who are now owned by a third party, and their likeness would likely be from the N64 games. That's the main reason for me--however, if Banjo was in the base, and Steve was either in the base as well (unlikely) or DLC, I'd be less concerned because it feels wrong to complain if my dream came true. I still wouldn't "like" the character, but I'd be happy Steve's fans got representation too. The "janky movements", the dullness of having a third party, multiplatform avatar character makes Steve a boring choice, in my mind. But those are superficial aspects that I don't think get to the heart of the matter.