Gnome desktop supports <Alt>Grave as far as I know:

https://github.com/jussi-kalliokoski/dotfiles/blob/master/.config/gnome3-extra/keybindings.conf

and when I press Alt + backtick button at the settings > keyboard > shortcuts It shows up a corresponding symbols. But it doesn't actually work. Is this a bug? There doesn't seem to be any other application interfering with it.

I am desperate for this key binding because of my muscle memory. Any other workaround will be helpful.

ibus had a binding that needed to be changed to avoid the conflict. You can check this by doing either:

gsettings list-recursively | grep -i grave

by default gnome desktop has a binding, but with a different name <Alt>Above_Tab

gsettings set org.gnome.desktop.wm.keybindings switch-groups "[]"

gsettings set org.gnome.desktop.wm.keybindings switch-group-backward "[]"

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