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Reply to Can't install macOS Monterey beta on M1 external drive
The key (at least for me) was to use a Thunderbolt 3 SSD. After various attempts with a USB-C Samsung T5 I came across some articles (to which I can't like on these forums for some reason... - search for "How to boot an Apple Silicon Mac from an external drive") that pointed out that requirement. I then ordered a Samsung X5 external Thunderbolt 3 SSD and the installation went and worked fine with that.
Jun ’21