Is there a limitation on "setWatch"?

In the topic of setWatch limitation - I have a strange behaviour of setWatch.
I'm using rotary encoder (not the poteniometer, but the one you install on motor to read impulses).

  let count = 0;
  pinMode(cfg.pin.encoder1, "input_pulldown");
  setWatch(() => {
    const state = digitalRead(cfg.pin.encoder1);
    if (state === 1)
      count++;
    
  }, cfg.pin.encoder1, { repeat: true, edge: "rising" });
  
  setInterval(() => {
    console.log(count);
    count = 0;
  }, 1000);

Code should count impulses per second, and it does. However strange thing is that at low speed it counts 45-50 impulses, at high speed (~x2) it counts 43-48 impulses. Clearly expectation was quite the opposite:)

Assuming code and wiring is ok - I was wondering if maybe I'm hitting speed limitation of Espruino - which is simply not able to process frequently enough impulses.

I'm using ESP32 and Espruino 2.04