Figured out the issue. This seems to have been happening because of a cyclical reference when adding a package in the parent directory of the Xcode project:
├ MyPackage
├ Package.swift
│ ├ Sources
│ │ ├ Hello.swift
│ │ ├ World.swift
│ ├ MyPackageDemo
│ │ ├ MyPackageDemo.xcodeproj
│ │ ├ ...
I solved this by adding a blank package file to the demo project's root directory:
// swift-tools-version:5.9
import PackageDescription
let package = Package()
I'm now able to add the package via Xcode without crashing 🙌🏼