(Kitco News) - Cryptocurrencies has taken a big step into the mainstream investment world as the Chicago Mercantile Exchange prepares to launch a Bitcoin futures contract by the end of the year.

In an announcement released Tuesday, the CME said that the new contract will be cash-settled and based on the exchange’s CF Bitcoin Reference Rate, which is a one-day reference rate of Bitcoin priced in U.S. dollars. The latest annoucement has caused Bitcoin to surge to new record highs.

According to Kitco News aggregated bitcoin charts, the e-currency last traded at a record high of $6,323.70.

"Given increasing client interest in the evolving cryptocurrency markets, we have decided to introduce a bitcoin futures contract," said Terry Duffy, CME Group Chairman and Chief Executive Officer. "As the world's largest regulated FX marketplace, CME Group is the natural home for this new vehicle that will provide investors with transparency, price discovery and risk transfer capabilities."

In a comment to Kitco News, the CME said that it is watching the cryptocurrency space very closely but could not comment on whether this is just the first of what could be many new futures products. While Bitcoin is the biggest cryptocurrency, other products like Ethereum, and Ripple are gaining in popularity and marketshare.

According to the CME, the cryptocurrency market capitalization has grown in recent years to $172 billion, with bitcoin representing more than 54 percent of that total, or $94 billion. The bitcoin spot market has also grown to trade roughly $1.5 billion in notional value each day.

Phil Flynn, senior market analyst with at Price Futures Group, looks for the CME launch to add credibility to the cryptocurrency and for good volume to emerge, particularly from traders who might want to bet on downward moves in the price.

“This should be very bullish for bitcoin in a way because you now have an exchange that is actually trading this and giving it some kind of basis to work with,” said Flynn. “It gives a new layer of credibility to a current that a lot of people have said has been a fraud.”

Flynn added that the new future contract gives Bitcoin another dimension in the marketplace, giving traders the ability to place short bets in the marketplace.

“Once you have a futures contract, now you have a way to sell it or hedge it," he said. "“I think it’s going to be a very successful contract,” Flynn said. “I think it’s going to put some street cred[ibility] into a currency that has been really thought by many to be kind of a Ponzi scheme.”

Bitcoin has gained significant investor attention as prices have recently pushed above $6,000 an ounce. Charts show that Bitcoin has rallied more than 500% since the start of the year.

Analysts have comment that strong speculation in Bitcoin has hurt gold prices, which has struggled to hold the key psychological level of $1.300 an ounce.

Allen Sykora contributed to this article.