I recently picked up the game myself and have already fallen in love with it (rlly mad I missed all the party crashes). Anyone can look at the game and see the potential for a sequel but what everyone really wants is evidence. This is all we know so far.
1) Strong Sales and IP performance. As much as people want to deny it, the game objectively did well with almost 3 million copies sold and even ending up in Smash. FYI this game outsold xenoblade chronicles 2 and Mario strikers!!
2) The producer has mentioned interest in exploring the world again: https://www.nintendoreporters.com/en/news/nintendo-switch/arms-producer-kosuke-yabuki-wants-a-sequel/
3) MKW has finished development and came out, outside of potential DLC (which is probably inevitable) this frees Yabuki from his Mario Kart chains and who knows what could happen then.
Anyways, I’d like to believe we may get something this generation, Nintendo have already acknowledged the game by giving it a switch 2 patch. Now it’s only a matter of time till Arms 2 trust me guys 😎
by Quirky_Image_5598