I had the same problem, although I had ~25 GB of free storage, but that did not suffice, as other users also mentioned here.
Eventually what helped was going here (Note: I am using macOS Sonoma):
Settings -> Storage -> Developer -> Click on Information icon next to GB amount
This should open up a window that displays all kinds of XCode data, that you can manage and delete to clear up some space.
In my case, I had several different iOS 16 installations on my system, which I obviously did not need anymore. Deleting all of those files saved up > 50 GB for me. I know this might not help everyone, but what I suggest is cleaning your Mac to free up some space or if you have to, increase your Mac's disk space with external storage.
