So far I only found some obscure mention of this issue on reddit (somewhat buried too), but for the sake of not relying on that platform anymore I thought the info should be on lemmy.

I recently got an 8bitdo ultimate 2c wireless controller to try out with my steam deck which I mostly use docked in TV mode. (Edit: I use the jsaux 6-in-1 dock.)

After initial testing looked good (2.4g mode connects, all buttons work, rumble works) I quickly ran into an issue where the controller would disconnect and shut down every minute or so or begin to rumble continuously without apparent reason. Not so in Bluetooth mode or with a cable.

What fixed the issue for me was connecting the 2.4 dongle not directly to my dock (which only has USB 3 ports) but doing so via an extension cable (edit: just a cheap male to female USB extension, the shortest one I could get).

Apparently, the active USB 3 port causes some kind of interference with the 2.4g signal, which is fixed by a few cm of physical distance. My dongle is now lying maybe 5cm away from the dock and the controller works flawlessly.