Circumcision was a unique sign of God’s covenant with Abraham and later with the Israelites. Only those who were circumcised were permitted to participate in the Passover and other Jewish feasts.
According to many sources, circumcision already existed in Egypt, long before Abraham’s time. A careful study of the proofs shows that this is largely based on interpretation. It is actually rather unlikely that someone would mutilate his body by cutting away the foreskin.
Just as God gave the rainbow to Noah as a unique and new sign, likewise the circumcision was a unique and new sign of His covenant with Abraham.
For further study, go to Study History of Circumcision