Or possibly both.
We've now had iterations of Smash on five straight home consoles and the 3DS. Smash Ultimate has reached what could easily be considered a plateau for the series with a roster that will be pushing 90 characters and highly refined gameplay. So the question becomes, do they even bother to try to top it again in about 4 years?
Smash Ultimate: Deluxe could be the Mario Kart 8: Deluxe of the next generation. A game that's just so well designed from the previous generation that it could go on sale at or near launch and be a perennial seller throughout the console's lifespan. Just give it a few modest upgrades and dump (most of) the DLC on the players' heads. They might lose a 3rd-party fighter or two (though good luck to the PR department that has to explain why Cloud's no longer in Smash) and probably several Mii costumes, but that shouldn't hurt sales much, if at all.
On the other hand, there's the possibility of a new Smash, which is a game that can anchor any holiday schedule and galvanize the whole Nintendo community. A new game is generally preferable to a legacy game. Mario Kart 8: Deluxe is a bit of an outlier due to it appearing on a failed system. Smash Ultimate doesn't have that problem (opportunity?). It's already the best-selling game of the series by a significant margin and it will presumably continue to sell millions every year until the Switch is replaced. Would Nintendo fans be willing to go over a decade without a new game in the series?
And, of course, there is one other wild card beyond what Nintendo would want. Sakurai. Few, if any game series are as linked to a single vision as Smash. He's still a young man, but he's been making Smash games for over two decades at this point and really has only been able to take a break from the series twice (after Melee and after Brawl) in all those years. The guy not only deserves a break, but we deserve to see him spread his wings and work on some other projects to keep him interested. Furthermore, he might just not want to do it. By the time he finishes working on the DLC, Ultimate will have been out for a solid 3 years already and will have been working on Smash since roughly when Kid Icarus: Uprising was released in 2012.
Myself, I personally do think that Smash will be put on hiatus for several years after the DLC is finished. As such, I believe a Smash Ultimate: Deluxe release soon after the Switch 2's launch is almost inevitable. Pair it with a launch of Mario Kart 9 and the system will already have a strong launch window with two evergreen games that will continue to soak in sales for years.
The question then becomes whether the series will receive a new game sometime in the mid- to late-cycle, or will it skip to the Switch 3 (if such a thing exists as the industry might well have a paradigm shift soon)? For that, I'm not so sure about the answer. A secondary question would be if Sakurai would jump in and add another Fighters pass to the Deluxe version (maybe backwards to the current as well) without jumping into fully developing a new game. That would certainly hold the game over for another few years.
Anyway, what do you think? My own view is that I wish Sakurai the best, so he takes as much time as he wishes to scratch whatever other artistic itch he has so he can come back fully prepared for one final go making a Smash game. And, since I wish it, I'll go ahead and predict it.
*Note: I know some people call the current game Smash 6 because of the 3DS game. If you want to call the next game Smash 7, go for it, just do me a favor and don't derail the thread. Okay? Okay.