I also just updated Xcode to Version 12.1, hoping it would solve the problem, but it doesn’t make any difference, I keep getting the same message.
Obviously I tried disconnecting and reconnecting the device, but to no avail.
I also removed all the data under ~/Library/Developer/Xcode/DerivedData/, but again with no effect.
It seems like some other people have had this issue before, but I didn’t find any working solution for me.
I hope someone with a recent similar experience can point me in the right direction for a proper way to solve this problem.