Life is not good right now if you want to associate a M1 Mac with a ultra-wide monitor, but help is on the way. Macworld and 9to5Mac have learned that Apple is promising a macOS update to fix the lack of supported resolutions on ultra-wide and super-ultra-wide monitors connected to M1-based Macs. Apple has not said when this fix might arrive, although it is already under testing. macOS Big Sur 11.2 and could theoretically incorporate the fix then.
A 9 to 5 reader discovered than a tool like that of Stéphane Madrau SwitchResX can serve as a workaround, although you clearly don’t want to rely on a third-party app just to use your monitor as intended.