Max supply refers to the total amount of a cryptocurrency (or maximum supply) which will ever be in circulation. For example, the max supply of Bitcoin is 21 million, because it is pre-programmed to only ever create 21 million coins
Bitcoin’s 21 million coins is an example of a hard cap, it is predefined. This contrasts with a soft cap, for example Ethereum does not have a specific predefined amount of total coins, therefore it has a soft cap, dependent on later decisions. Other cryptocurrencies may even have an unlimited supply, meaning there will never be a maximum amount, however these are likely not good investments long term since value is often tied to scarcity.
Why is max supply important?
Max supply is important because it allows you to calculate the total market cap of a project and to estimate what the total market cap could be in the future. To find the total market cap of a project you simply need to multiply the maximum supply by the current market price.
A low maximum supply is generally considered must better than a high maximum supply because it means that the supply is more scarce and thus more valuable.
What are the max supplies of Bitcoin & Ethereum?
As mentioned, Bitcoin has a hard cap of 21 million coins. This means that the max supply will always be 21 million.
Ethereum on the other hand has a no hard cap and therefore it is impossible to know for certain what the max supply will be.