The doc is quite clear on this
External ID
Case-insensitive deterministic encryption supports Text and Email external ID custom fields but not other external ID custom fields. When you create or edit these fields, use one of the following field setting combinations.
EXTERNAL ID UNIQUE ATTRIBUTES ENCRYPTED
Text None Use case-insensitive deterministic encryption
Text Unique and case sensitive Use case-sensitive deterministic encryption
Text Unique and case insensitive Use case-insensitive deterministic encryption
Email None Use case-insensitive deterministic encryption
Email Unique Use case-sensitive deterministic encryption
You can’t save changes to both Unique - Case-Sensitive and Encrypted options at the same time. Change one setting, save it, then change the next.
I've done this in my org and it works fine