Apple Watch will not reset

had the same problem.

Once the « Power off » button appears, instead of pushing the Digital’ crowne, try long-pressing the Power Off button, maybe with a bit of pressure (Force-touch) as well.

That should make the « Erase » prompt appear

You might in that "endless" loop if you are trying to update your watch from an old version, watchOS 6 ? That's what is showing up here..., although not sure if that is really the case?

Anyways, if it is indeed so, check my user tip here..:

What to do if updating an Apple Watch wit… - Apple Community