Apple watch notifications panel not closing with crown scroll after watchOS11.1 update

Device Apple Watch Ultra 2

After updating to watachOS 11.1 notifications panel cannot be closed with crown by scrolling as before.

Steps to recreate:

1. wake watch to see watch face
2. scroll down crown to see notifications panel. Doesn't matter you have notifications or not.
3. scroll up to close notification panel and it is not closing. If you have notifications it will just try to scroll but not closing the notification panel.
4. press crown. Shows watchface
5. scroll up. Notifications panel suddenly appears and closes as it should be in step 3. Before scrolling up, scroll down does not work - notificaitons panel does not show.
6. scroll up. You see smart stack. Everything as expected from here

Tried hard restart. Didn't help