In a small bowl combine bread, vinegar, and 1 Tbsp. water. Let stand 10 minutes.
Working in batches, in a blender or food processor puree watermelon, bread mixture, tomatoes, sweet pepper, onion, lime juice, olive oil, and 1/2 tsp. kosher salt. Serve immediately or chill up to 2 days. Top with thin slices of watermelon, red onion, tomato, or serrano chile.