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I'm new to the world of hi-fi audio, but have found myself completely blown away by the Schiit Asgard.

 

I'm currently using Grado SR-60i headphones, and a HeadRoom Total Bithead as my DAC.

 

I'm wondering if anyone has any experience with this same setup and where I should consider upgrading.  As a newbie, I can recognize a profound difference between the setup I have now and the typical big box store setup.  However, I'm sure there's a law of dimishing returns and I'm not clear where I am on the spectrum.  Would I get the most bang/buck by upgrading my headphones or the DAC?

 

Also, I tried using an older Toshiba SD-K620 DVD player that has a 192kHZ/24bit DAC, and ran it directly from the RCA output to the Asgard.  The result was distortion on all the louder points (clipping?) which was most disappointing for my cheap self.  Any advice on this issue would be welcome as well.