Preheat oven to 350°F (175°C) and line a cupcake pan with liners.
In a bowl, whisk together flour, baking powder, baking soda, and salt.
In another bowl, beat butter and sugar until light and fluffy. Add eggs one at a time, mixing well.
Mix in watermelon juice and milk. Add red food coloring if desired.
Gradually add dry ingredients to wet mixture and mix until just combined.
Fill cupcake liners about 2/3 full and bake for 18-20 minutes.
For buttercream, beat butter until creamy, then add powdered sugar and watermelon juice. Add red food coloring if desired. Add milk as needed for desired consistency.
Frost cooled cupcakes and sprinkle with mini chocolate chips to resemble watermelon seeds.