I have gotten the same thing and it eventually goes away. Check to see if you have a message.
You can sign out, then back in. I get that too - I tend to ignore it.
I assume you’re on the buyer app since you mentioned favorites.
Open the app and tap on You on the bottom.
Tap Favorites, then tap All Updates at the very top.
At this point I usually scroll down the list a little bit to make Etsy think I’m looking.
The red number should disappear when you close the app.